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India Cryptocurrency Scene in Turmoil; Govt Plans on Banning Crypto Trading

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Just when India saw investors rushing back into the cryptocurrency trading scene, the country saw yet another setback with respect to regulations. In the latest development, the Indian government is reportedly planning to introduce a new law banning Indian cryptocurrency trading.

According to Bloomberg’s sources familiar with the matter, the bill in question is expected to be discussed soon by the federal cabinet before it is sent to the Parliament.

Blockchain, not Bitcoin

This is an often-heard stance across the digital asset space and the Indian government holds a similar sentiment. There is no doubt that the country’s government is a huge proponent of blockchain technology with several pilots and projects launched in favor of fledgling technology. More than half of Indian states have already initiated government-sponsored blockchain-based projects.

India still has a long way to go before it can call itself a hub of blockchain as despite these attempts to lure potential blockchain investments since the innovators in the country have a limited window of experimenting just with private blockchain as opposed to a more flexible global scenario.

At the same time, planning on an outright ban of cryptocurrencies in the country is a major blow to the crypto ecosystem in the country. This news comes after reports of the country’s finance ministry seeking inter-ministerial consultations on a potential ban surfaced earlier in June this year.

Blast from the past

The Reserve Bank of India had previously banned commercial banks from servicing to cryptocurrency traders and exchanges in 2018. This was responded with a lawsuit in the Supreme Court by cryptocurrency exchanges challenging the RBI ban in September 2019. The ban was overturned in the March of the following year bringing a respite for both investors as well as the crypto platforms.

Firms that had previously fled the country amid a lack of regulatory clarity to more crypto-friendly countries were looking to expand their footprint following the development. Soon after, the trading volumes on cryptocurrency exchanges servicing Indian clients also increased substantially.

Implication

While the ban materializes, it would not just be a huge traders/investors and existing cryptocurrency platforms, but it would also pose as a major hindrance to big companies seeking for the foray Indian market, and the country could potentially lose out on a lot of employment opportunities as other Asian countries have taken the route of regulating the space instead of outlawing them.

Existing cryptocurrency exchanges, on the other hand, is likely to register their companies abroad to skirt adverse legislation in India and not to forget the crypto assets worth thousands of millions owned by the people in the country that would have to be disposed off if the bill becomes a reality.

Indian Crypto Industry Worried of Alleged New Crypto Ban by Authorities

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Five months ago, the Indian crypto industry was filled with hope and excitement as the Supreme Court lifted a ban on cryptocurrencies. Nevertheless, the excitement and hope were once again overshadowed by uncertainty, after an anonymous government official allegedly reported that the government is drafting a new law to ban digital currencies.

According to the alleged government official, two ministries and the Reserve Bank of India ( RBI) are proactively structuring the legal framework to outlaw cryptocurrencies for good in India. A report by the Indian news outlet, Moneycontrol, on August 4,  claimed some Indian authorities want to ban cryptocurrency trading in the country. The report suggests that the Ministry of Electronics and Information Technology, the Ministry of Law and Justice, and the Reserve Bank of India (RBI) are deliberating on the structure of the law to ban digital assets.

New crypto ban scare in India

The news outlet quotes the anonymous official, saying, “Once Parliament resumes for the session, we are hoping to get [the law] ratified.” Indian lawmakers are expected to assemble again in late August or at the beginning of September. As per the official, the government wants to outlaw cryptocurrencies through a statutory structure, as opposed to other means such as RBI’s blanket ban. He adds, “It will clearly define the illegality of the trade.”Back in 2018, the Reserve Bank of India prohibited banks from offering their services to businesses involved with cryptocurrencies. However, the crypto ban was lifted by the Supreme Court back in March. Notably, the recent revocation of the blanket ban led to the rise of many new cryptocurrency exchange platforms in the subcontinent. Indian authorities are now threatening to introduce a law banning cryptocurrencies rather than RBI’s crypto ban.

Crypto is vital to Indians during coronavirus pandemic

Cryptocurrency exchanges across India have reported substantial growth in the last few months, as investors shift away from traditional assets. Notably, many parts of India are under strict movement restrictions since the government imposed a lock-down in March.

Indian-based crypto exchange platform, WazirX, saw a massive 80 percent growth in both March and April. Furthermore, CoinDCX, which is also based in India, saw ten times more new registrations the week after the crypto ban was lifted, than the average registrations before the repeal.

Russian Federation Drops Plot to Outlaw Bitcoin Transactions

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The Digital Financial Assets Bill (DFA), which is scheduled to be read for the second time in the Russian Parliament today, has withdrawn mentions to the administrative and unlawful obligation for bitcoin transactions. The third and ultimate reading will institute the draft as a law. According to the head of parliament’s financial markets committee, Anatoly Aksakov, while speaking to a domestic news outlet, Ria Novosti: “There will be no liability in this bill.” 

Administrative and criminal liabilities withdrawn from DFA bill

Speaking to the media agency, Aksakov noted that the decriminalization of bitcoin investment had been set aside until further notice. He also said: “They have removed everything; there is only a link that the regulation of digital currency will be determined by another law.” The previous edition of the DFA bill intended to introduce financial penalties of up to $7,000 or face seven years in prison.

In addition, the bill suggested penalizing firms that issue or deal with cryptocurrencies without the authorization of the Russian central bank. The proposed financial penalties amounted to approximately $28,000 for violations of the Bitcoin Transactions Act if it is used as a means of payment for goods and services. Initially, the original bill proposed that firms would have to pay up to one million rubles ($13,900), while individuals would be fined at least 200,000 rubles ($2,800) for transactions in virtual assets to pay for goods and services.

Lawmakers planning “special law” to outlaw bitcoin transactions

Moving forward, Aksakov noted that the current draft bill, in its amended structure, now only concerns the challenges surrounding the definition of digital financial assets; and spells the standards for dealing with blockchain tech, among other issues. Besides, Aksakov, who is in charge of sponsoring the bill, anticipates the proposed law to be enacted on January 1, next year after adopting the second and third readings during the State Duma spring section that ends on July 23.

Legislators in Russia are also working on another “special law” on cryptocurrency policing, which may introduce strict penalties for dealing with bitcoin transactions. According to Aksakov, the law could be adopted during the autumn session, which ends in December. Digital currencies in the Russian Federation remain vague. The legality of ICOs, Smart Contracts and Crypto Mining lacks a clear definition despite the high number of proposals submitted to the legislature for this intention.

Venezuela Outlaws Crypto Mining Activities in the Country

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Venezuela has recently banned the trade in crypto mining in the country. The ban is mainly aimed at citizens who reside in all government-owned houses and in all their surrounding vicinity. In a maiden announcement on Friday, Minister of Habitat and Housing, Iidemaro Villarroel, said that the continued use of crypto mining could have an impact on the distribution of electricity in the country.

Besides, the Minister said Crypto ‘s ban on mining was part of the Great Home Project. In his speech, the Minister revealed that crypto mining and other instruments involved in its operations consumed a lot of power. This, in turn, violated the government’s already formulated electricity distribution policy. He added,” In this coordinated work, we have detected the harmful effects of these elements of high electrical demand in the public houses of the Grand Mision Vivienda project.”

Venezuela’s Great home project plans

The Great Home Projects (Gran Misión Vivienda) involve the government’s plans to provide grant housing to local Venezuelan citizens with low incomes. The government is targeting the poor and providing them with adequate housing despite the harsh economic environment that the county is currently facing. And the government has also managed to deliver around 3 million homes to the citizens in their efforts towards the project.

Around 151 houses were also distributed to different families in the nation’s capital of Caracas; back last year. It is precisely these government-owned houses and their surroundings that have notified the ban. They insist that all crypto mining trades in these households are considered illegal and a crime punishable by law.

Crypto mining effects on the country’s electricity supply system

The Venezuela government has attributed the Crypto mining trade to directly affecting the power grid. They insist the mining process tends to consume a lot of power, thus affecting the distribution of electricity throughout the country. Back in 2019, there were reports of the national electrical shutdown after the Guri hydroelectric dam failed; further proving a significant problem that needs to be addressed.

Indian Banks Hesitating to Embrace Crypto Industry Albeit RBI Consent

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The Reserve Bank of India (RBI) reversal of the outright crypto-currency ban in March was a gift to the flourishing Indian crypto-industry. The country’s emergence of new exchange platforms has been the incentive to the industry ‘s steady and healthy growth.

While India is one of the most affected nations by the coronavirus pandemic, this significant growth is noticeable. Indeed, the epidemic has led to a downward economic disaster across the nation. In such crisis-ridden times, blockchain and digital currencies have proved the desperately needed remedy for both investors and fintech ground-breakers alike.

Crypto regulatory wariness

Nevertheless, lifting the blanket ban seems was not the ultimate solution to the regulatory uncertainty that most had hoped to be. There have been alleged incidents where Indian banks have denied financial services to crypto-related firms. The good thing is that the industry has a more explicit regulatory structure than there was in 2017; the extent of cynicism and turmoil was sky-high.

Notably, a rumour emerged within the Indian Ministry of Finance for interdepartmental consultation on a law proposing all crypto operations to be abashed. The draft law proposal involved a heavy financial penalty for guilty individuals and a prolonged prison sentence. Recently, the rumour was refuted.

According to a business consultancy firm, AKM Global, if the proposal for a blanket ban passes into law in its current fashion, it would “completely decimate the crypto-industry in India.” Rumor has aroused the already fading fears in the crypto-currency industry in India. Regardless of the recent rumors, Nischal Shetty, CEO of WazirX, still maintains confidence with the government.

An email sent to Cointelegraph’s crypto media outlet quoted:

“On the day the news about the ‘note’ broke out, it created some panic among the community. But that’s all. We are not seeing any difference in the trading behaviour on WazirX since then. There have been speculations about crypto ban in the past as well. With more than 5 million crypto users in India, I’m confident that our Prime Minister won’t let us down.”

Indian Banks reluctance to embrace crypto industry

In addition to RBI, certain private commercial banks in India have refused to process cryptocurrency transactions. However, a large percentage of speculations suggest the reason why the cryptocurrency sector lacks knowledge; as noted within various government bodies.

Siddharth Sogani, the founder of Crebaco research firm, believes that there may be further conflicting interests at play. According to him, “Banks will always be globally opposed to this industry because if crypto comes into action; P2P transactions will eliminate the need for third-party bankers.”

Regardless, in response to a request for information from the co-founder of the crypto exchange Unocoin, Harish BV, the RBI did not, in fact, indicate any limitations on banks offering crypto-related companies and individual traders to account. This was the major RBI statement that presumably banks were waiting for, but the actual quantifiable effects remain.

Indian Crypto Firms Optimistic Despite Crypto Blanket Ban Rumors

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Indian crypto firms remain optimistic for the bright future, despite rumors of an imminent ban on cryptocurrencies from India. Last week, the Indian Ministry of Finance submitted a proposal to permanently ban digital currencies from the country.

The Indian cryptocurrency industry has begun to experience growth since the Reserve Bank of India ( RBI) has been forced to lift the banking ban by the apex court, giving the government embattled industry a new lifeline. Even so, after three months of a smooth ride, the industry is once again facing the threat of permanent dismantlement.

Indian crypto firms under siege

If the new bill awaiting approval by ministers passes into law, it will end the booming cryptocurrency industry. Notably, the new law will affect crypto-related firms and individuals who own and trade digital currencies. 

Regardless, some Indian crypto firms are still optimistic and claim there is no need to panic. The first cryptocurrency firm that comes to mind when talking about the Indian crypto sector is WazirX. WazirX has been making headlines in the media for record-breaking trading volumes, and the recent high-profile acquisition by exchange giants Binance.

Optimism galore

According to the CEO and founder of WazirX, Nischal Shetty, the news of a blanket ban are merely rumors. He says:

“While we do not question the credibility of the source, we do know from our own links within the government that India’s crypto sector, in fact, is viewed in a positive light. There is no ban being considered, as far as we know.”

Moreover, the founder and CEO of CoinDCX, Sumit Gupta, commented on the rumors. The crypto firm recently managed to raise $2.5 million in extra funds to venture into several crypto-related investments in India.

Furthermore, Gupta launched CoinDCX’s online crypto and blockchain learning platform to drive adoption. He noted that India is yet to enjoy the best days, and he sees his new initiative introducing digital currencies to at least 50 million people in India. He stated:

“The launch of DCX Learn is a big step toward understanding and embracing crypto. It comes at a time when Indian crypto companies are thriving. So, instead of focussing on rumors, we must do all we can to fast-track financial inclusion in India.”

Russia’s Proposed Crypto Ban Opposed by Ministry of Justice

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Russia’s proposed ban on crypto, which seeks to restrict all crypto-related activities within the Russian Federation, has suffered yet another setback following a negative review by the government’s vital arm.

Russia’s Ministry of Justice challenged the newly proposed bill seeking to ban cryptos on 16 June, exactly seven days after Russia’s Ministry of Economic Development also issued a scathing criticism of the bill. The new bill was proposed by the legislators back in March, but it is believed to be the original idea of the nation’s central bank.

Russia’s proposed crypto ban criticized by both the public and government bodies

The Russian central bank is known to be anti-cryptocurrencies and does not support the use of digital currencies. After being revealed, the new proposal seeking to prohibit individuals from using the country’s necessary facilities to run any crypto-operations was met with some cruel reviews from the Russian cryptocurrency community. 

Notably, the proposal seeks to bar Russians from utilizing the country’s infrastructure to conduct, run, or operate any crypto-related activities. However, individual people will be allowed to inherit digital assets or receive them due to the counterparty’s bankruptcy procedure. Additionally, cryptocurrencies can be seized like any other property by a court order.

More clarity required

According to Russia’s Ministry of Justice, the bill does not clarify the justice system on what to do with confiscated digital assets. Under normal circumstances, marshals sell the confiscated assets through auctions, but with crypto transactions being prohibited in the country, this will be impossible. 

Instead of the standard procedure, the Russian Ministry of Finance proposes that a government agency be assigned to assist Russians in selling their cryptocurrency holdings overseas. Meanwhile, Anatoly Aksakov, the sponsor of the draft bill while speaking to Tass news agency, stated that the draft bill on digital securities is already finalized. It is only awaiting to go through the final reading.

Indian Ministry of Finance Proposes to Permanently Ban Cryptocurrencies

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Just three months after the Supreme Court lifted the ban on crypto banking, an unexpected turnaround has taken place in the Indian cryptocurrency community. The Indian Ministry of Finance has made a proposal to legally prohibit cryptocurrencies in the country.

According to a report by the Economic Times, the new proposal will first be submitted to the Union Council of Minister and afterward referred to the Indian parliament for the last review. Interestingly, the Indian Supreme Court lifted the ban on providing banking services to crypto-related firms.

Indian Ministry of Finance blowing away the Indian Crypto dream 

Back in 2019, a group of top government officials, headed by ex-finance secretary Subhash Garg, had proposed a law to fully outlaw India’s digital currencies. In addition, the committee affirmed to anyone found using cryptocurrencies a prison sentence of up to ten years or a fine of $3.2million. The daft did not materialize, however, and little is known about it.

“No person shall mine, generate, hold, sell, deal in, issue, transfer, dispose of or use cryptocurrency in the territory of India,” the draft proposal read.

Once again, the latest proposal by the Indian Ministry of Finance has instilled fear in the country’s cryptocurrency community. The past three months have been peaceful and enjoyable, with new startups budding to drive cryptocurrency adoption in the country. However, the latest proposal seems hard to evade and will blow the Indian crypto dream a colossal blow.

Huge blow for Binance and OKEx

Major exchange firms such as Binance and OKEx, which were looking to expand their services to the country, will have to withdraw. An official of the corporate advisory firm, AKM Global, while speaking to media outlets, said that if the latest proposal were to be the same as last year, the country’s cryptocurrency sector would be completely “decimate.”

In conclusion, India is considered to be one of the most prominent and promising digital currency markets. The only problem is that the government and regulators are not supportive, but it remains to be seen whether the country will push forward the proposal.

 

The Indian Cryptocurrency Saga: From Bans to Massive Investments and Everything In Between

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India has always been an epicenter of growth and development, with a large demographic that plays a key role in creating markets. The population of the country has also been a major pull for cryptocurrency companies that have understood the impact it could have on mainstream adoption. All this conceptualisation came to a grinding halt in April 2018 when all forms of cryptocurrency transactions were banned by the country’s primary bank.

The Supreme Court of India finally lifted the ban in March 2020 after months of trials and legal battles by crypto-currency evangelists. This decision has brought in a wave of new investments and the South Asian subcontinent looks bright for the future. Let’s look now at how India’s virtual asset industry has changed and where it can go from that point forward.

Since Bitcoin ‘s inception, world governments have been scrambling to ensure that regulatory clarity in terms of the cryptocurrency industry is maintained. India has also been caught in the mix, debating the industry and how it can be managed.

2018 and the RBI ban

India had a functioning and thriving community of crypto-currency prior to the ban. Several crypto-currency exchanges and companies played a prominent role in creating the ecosystem of digital assets in India. Once the RBI made it illegal for cryptocurrencies to act as legal tender, major players like Zebpay and Coinex almost instantly had to shut down shop. Some organizations have decided to leave the country and take their business to another location. Analysts noted that despite the ban, there were still several citizens trading in crypto although using foreign exchanges.

The Supreme Court- Crypto’s Messiah

The cryptocurrency ban revealed one thing about the Indian masses-the would not take anything sitting down. Once the ban was in place, several cryptocurrency supporters and evangelists made it a point to move the country’s highest court for a fair trial. Non-profit groups and associations hired their own legal teams to make crypto’s case which finally came to fruition in March.

According to the Supreme Court’s latest decision, cryptocurrencies were no longer an illegal tender in India. This also meant that traders could finally make INR to crypto transactions without having to worry about conversions rates related to stablecoins or foreign currencies.

The Indin Cryptocurrency Scene Now

All doubts about the effectiveness of the court’s decision were removed when Indian traders jumped into the fray once more wholeheartedly. Reports showed that in the month of March alone, the Nischal Shetty founded Wazir X saw a whopping 400 per cent rise in trading volume. The exchange witnessed a 270 per cent spike the following month, unheard of consecutive figures in the Indian cryptocurrency community.

India’s potential was also recognized by the Chnaghpeng Zhao led Binance, which initiated a $50 million fund to promote blockchain technology in India. This was done in partnership with WazirX with a promise to build a more sustainable digital asset ecosystem in the country. Shetty, who is also the chief executive of WazirX had said:

“They [investors] have realized that a lot of startups are mushrooming and they want to be the early movers,” he said. “In the US, there are huge investments taking place (in crypto startups) since 2010, which will also happen in India.”

What does the future hold?

There is no doubt that, now that the ban is lifted, more and more investors will continue to make inroads into the country. Popular organizations such as BeFaster and CoinSwitch recognize that the wide scale scope offered by the population of the country is incomparable to the rest of the world.

If proper steps are taken, the companies mentioned above will have access to millions of traders most of whom are under the age of 30. Blockchain-based applications such as BeFaster will be attractive to the younger generations due to their focus on fitness and health. Customers of the application will also be able to earn tokens according to how they use it. BeFaster’s Co-Founders and CEOs, Irina Manilitsch told TWJ that:

“The fact that the government of India is opening up to cryptocurrencies right now is a great opportunity for investors and the population. The people of India will now also have the opportunity to generate additional income just by moving. Investors, on the other hand, now have the chance to invest in the future and a booming market.”

The path toward mainstream acceptance, however, is not all rosy. Reports have said some crypto companies still find it hard to operate in India because some banks refuse to deal with them. For their part, the banks have referred to the criminal activities that are being conducted using crypto as the key deterrent. If the crypto-currency industry needs to take off in India, exchanges and companies are responsible for providing a safe and legal environment for virtual asset trading.

 

 

 

Indian Cryptocurrency Exchange CoinDCX Raises Millions in Latest Investment Round

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Bitcoin and the rest of the cryptocurrency market have tried their best to become mainstream after a decade of their inception. This growing financial sector has become so important that regions around the world have begun to rethink their applications.

India was one of the few countries vehemently opposed to cryptocurrencies. The ban on cryptocurrency has been so effective that digital asset companies have been brought to the ground while many have relocated. Following the recent withdrawal of the ban by the Supreme Court of India, the country has seen a dramatic increase in the number of crypto investors.

CoinDCX was one of the few Indian cryptocurrency exchanges that were ramping up efforts to expand Indian cryptocurrency space. According to new reports, the exchange raised more than $3 million from investors in its most recent funding round. CoinDCX claimed that the new space investors were excited to form an ecosystem of change, innovation, and rapid progress.

According to sources, CoinDCX raised more than $3 million from investors like Bain Capital Ventures, Polychain Capital and HDR Global Trading. HDR Global Trading sounds familiar because it is involved in operating cryptocurrency exchanges like the popular BitMEX.

The sudden surge in investments started right after the Indian Supreme Court adjudged that the 2018 ban on crypto was unjust. According to the premier court in the country, the RBI’s stance on digital assets would hamper growth and development in the country. Sumit Gupta, the CEO and Co-founder of CoinDCX stated:

“As the country’s largest exchange, we are in a position to drive national crypto adoption forward responsibly. This successful investment round will go a long way in funding our vision of accelerating India’s growth into a US$5 trillion economy. With a slew of exciting projects in the pipeline, the closure of our Series A is the first step in a new chapter in the CoinDCX story as we continue to drive the mass adoption of crypto assets in India.”

CoinDCX stated that it would use the capital to revamp its marketing aspects as well as boost its product developments. Sumit Gupta added that cryptocurrency as an asset was just about to take off in the country. India stands in the perfect position to leverage the current market and draw attention to the changes in the space, said Sumit Gupta. CoinDCX was one of three Indian cryptocurrency exchanges that remained open during the ban and it looks like it paid dividends.

The exchange will allow more users to get on board by buying cryptocurrencies with fiat. One of the USP’s of CoinDCX has been its algorithm-based trading that has enabled users to make seamless transactions. The good news was in complete contrast to the situation in 2018 when the industry crumbled in India after RBI’s decision. CoinDCX has also pledged $1.3 million for a campaign called ‘TryCrypto’. The aim of the program is to increase the number of crypto users in India to 50 million.

The CoinDCX development came right after Tim Draper made glowing comments about the Supreme Court’s decision. The serial investor admitted that he would be interested in contributing to some of the great projects in India and boost the cryptocurrency space.