Banning cryptocurrencies or not has been a dicey subject for a long time now. Finally, on July 5, the Supreme Court of India gave the verdict where any financial institution partnering with any crypto exchange has to withdraw their support.
A study was set up by a finance ministry panel, where it was concluded that cryptos can even be treated as commodities.
A senior government official stated, “I don’t think anyone is really thinking of banning it (cryptocurrencies) altogether. The issue here is about regulating the trade and we need to know where the money is coming from. Allowing it as (a) commodity may let us better regulate trade and so that is being looked at.”
It was told to the television news channel ET Now last month that the regulations set up regarding cryptocurrencies would be wrapped up within the first fortnight of July.
A committee consisting of BP Kanungo, deputy governor of the Reserve Bank of India (RBI), and Ajay Tyagi, chairman of market regulator Securities and Exchange Board of India was set up to keep a track on investors and refrain them to do any illegitimate business and to curb money laundering.
An official from the committee said, “Trade is not a criminal offense. Most of us trade in various asset classes in the stock market. So how is this (cryptocurrency trading) any different? What has to be in place is a mechanism to be sure that the money used is not illegal money, and to track its source is the most important thing.”
Investors will have to treat cryptocurrencies as commodities in order to make them realize that these cryptos cannot be used as real money, said R. Gandhi, former RBI Governor adding, “If these are used to settle transactions, then it acquires the nature of currency. So that is one thing that one needs to be wary of. But if people want to invest in a commodity then that is different, because then we can assume that they are aware of the risks involved.”
The Indian government has also set certain anti-money laundering and know-your-customer guidelines to incorporate more suggestions on treating cryptocurrencies as a commodity.