India: Supreme Court Looks At Crypto Regulation Limbo, Asks Government To Make Decision

The government of India has taken an incoherent stance on the regulation and legalization of cryptocurrency for years, leaving most investors giddy. Since the country’s central bank banned the use of digital assets completely in 2018, companies have left India to relocate elsewhere. Meanwhile, even when the ban was later withdrawn, the Reserve Bank of India has consistently pushed for a ban, citing issues of consumer safety and market integrity.

On the other hand, the government has yet to give its official stance on the legality of the asset class, even after repeated calls in the industry to do so. However, this could soon change with judicial pressure now giving the government a boost to make a decision.

In a court hearing related to a Bitcoin scam earlier today, the Supreme Court of India early the government to “make their position clear” on whether cryptocurrencies are illegal or not, according to local media. While the government representative replied that this will be done in due course, a much-anticipated law regarding cryptocurrency regulation has yet to be submitted to parliament.

The WinBitcoin scam in question involved a multi-level marketing plan that promised a 10% monthly return on bitcoin investment, estimated at about $2.65 billion.

While such crimes could play a role in the RBI’s argument of rampant crime within the digital asset industry, experts have previously argued that regulation would actually curb such illegal activity.

Despite this, the Supreme Court’s insistence came shortly after India imposed a 30% tax on income from virtual assets last month, including any gains made from cryptocurrencies or NFTs. Though dejected by the high tax rate, many investors in the country expected this move to be followed by the legalization of the use of digital assets.

However, such hopes were soon crushed after Finance Minister Nirmala Sitharaman stressed that asset class taxation does not mean it has been legalized, even as many wondered how something illegal could be taxed. At the same time, the central bank has continued to express its negative outlook for the sector, preferring instead a blanket ban, similar to China’s.

As the two sides continue to battle over the status of cryptocurrencies in India, investors have been left in the dark as banks in the country continue to wait for official instructions. Have local reports suggested that banks are hesitant to support crypto transactions, even as consumer demand has risen. Because of this, exchanges have to rely heavily on digital wallets to conduct trading, which often comes with increased costs.

“We will wait for regulatory clarity and act accordingly, even in discussions with these exchanges,” one bank executive noted in the report, while another claimed the exchanges had yet to step up security measures such as KYC to be formally included in the financial statement. sector.

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