India: Has IMC Prepared Another ‘Draft Bill’ for Regulating Cryptocurrency?

Indian Government formed the IMC (Inter-Ministerial Committee) to assess and inform the lawmakers about cryptocurrencies. Recently, the IMC released its report which also includes a draft bill to enact a complete ban on cryptocurrencies in India.

Nevertheless, the minutes from the meeting of the IMC reveals that a ban wasn’t the initial or the only idea on the table. As reported earlier on CoinGape, the Committee held three meetings to decide on the matter. The draft bill was presented and accepted at the last meeting on 9-11 January 2019.

Reportedly, the Chairman of the Committee and Economic Affairs Secretary, Subash Chandra Garg was actually in favor of regulating the cryptocurrencies. Moreover, the Committee was initially formed to either regulate it as a commodity or a financial asset back in November 2017.

However, at the Indian Budget in 2018, Finance Minister Arun Jaitley made the following comments,

“the government does not consider virtual currencies as legal tender “and will take all measures to eliminate use of these crypto-assets.”

It encouraged the Committee to align their reports with the mission of the Government. In the meeting of February 22, 2018, two sets of groups emerged within the Committee – one in favor and the others against.

Ministry of Electronics and Information Technology Secretary Ajay Prakash Sawhney was in favor, while the RBI Deputy and Central Board of Direct Taxes (CBDT) Chairman against it. The Secretary told the Committee that,

“Secretary (EA) said that the option of banning can be looked afresh and asked RBI and CBDT to prepare draft law which might be needed to be prepared in case banning option is accepted,” the document said. He suggested that using cryptocurrencies in payment systems may be banned but not in its entirety “considering the nature of technology.”

Hence, two drafts were to be prepared as it was finalized in the meeting. According to Garg, the Committee should consider the guidelines from G20 and the international trade and economic organizations.

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However, a year later in January, the banning draft was formally indicted in the report submitted to the Government for review. The Committee “took into account the global developments and interaction” with IMF, among other sources.

The meetings revealed that for a more substantial part of the discussion, the Committee was in favor of regulating cryptocurrencies. Hence, it could be a possibility where the Committee is holding onto the regulation draft, for unforeseen developments in the space.

Do you think that the IMC or the Government will re-consider regulating cryptocurrencies? Please share your views with us.