The government of India seems to have changed its initial radical position on the restrictions of cryptocurrencies. The bill seeks to apply new regulations on cryptocurrencies and allow the government to present credentials to BRI to develop a fiat currency.
The application of regulations on the use of crypto assets has been under discussion at the government level in India for several months. Legislators are still evaluating the proposals in the bill to decide whether they are the most suitable for approval.
They have not yet given the reason why they have sought to approve that legal framework. At the same time, the government does not have a very prohibitive narrative on crypto assets.
The Government Wants a Less Strict Law on Cryptocurrencies
Even though the government of India initially had a more radical position on the restriction of cryptocurrencies that seems to have changed, the legal procedures directed to cryptocurrencies might become somewhat open to allowing their use and trade in the country.
However, the authorities introduced the bill in Congress for approval, seeking to exercise some control over the use of crypto assets. Beyond a total ban, the Indian government would develop a flexible regulatory environment, keeping cryptocurrencies at bay.
There is a strong relationship between the foundation of that initiative and the interest from the government in avoiding tax evasion through cryptocurrency markets.
Legislators would seek to introduce regulations that allow the active participation of the central bank in digital valuations. Small and large investors could acquire holdings of those assets in the cryptocurrency market. However, there would be a restriction on their use to make payments among citizens.
The Bill Seeks to Give the Central Bank Some Participation
The bill aims to apply new regulations on cryptocurrencies and give the Reserve Bank of India some authority over those assets. The new legal framework would allow the government to present credentials to BRI to develop a fiat currency based on the capabilities of the blockchain.
For that reason, the Indian central bank would create a digital rupee to issue its crypto asset in the economy of that Asian country. That approach goes together with the initiative of China to put into circulation its currency, which has similar characteristics.
There Is Still an Uncertain Scenario Regarding the Regulation of Cryptocurrencies
This issue has been under discussion for several months, but it is still unclear what the government will do regarding the bill. Nobody is sure of whether legislators seek to apply regulatory scrutiny to cryptocurrencies. There is no clarity about whether they will promote mass adoption of the central bank digital asset (CBDC).
However, the authorities have not arrived at the final decision yet, and the uncertainty continues with the government knowing the cryptocurrency world more deeply. The possible law enforcement presents guidelines subject to change while more digital assets like NTFs continue to gain popularity. Anyway, India is trying to incorporate cryptocurrencies into its economy through that new draft law.
By Alexander Salazar
