Indian Crypto Market: A New Panel and Blockchain on the Table

The Indian government is planning to appoint a new panel to regulate crypto.

Cryptocurrencies are currently under severe selling pressure. Many cryptos hit a terrible low since last week. The sudden crash emerged from China's statement to ban crypto and its trade in any form in the country, which sent shockwaves amongst the community. The Indian crypto market was also not spared from this crackdown. The values of Bitcoin and Ethereum shrunk rapidly, leading to huge traffic in sales. WazirX, India's largest crypto exchange crashed with millions of investors trying to sell and exit. Apart from this, the Indian crypto market had already been anticipating a government's regulatory bill, proposed early this year. The Bill was said to ban all private digital currencies and launch its own official currency called, the Central Bank Digital Currency (CBDC).

The Bill reportedly was backed by RBI and had also had plans to make the disclose of cryptocurrency holding mandatory. However, the Bill got delayed and it was in similar lines with the Subhash Garg Committee recommendations from 2019.

Well, it seems that the Indian Crypto market has something better to look out for this year. A recent Economic Times report revealed that the Central Government of India might set up a new panel of experts to study the possibility of regulating digital currencies in the country. Apparently, the committee will also focus on blockchain and propose it for technological enhancements.

Does India Need a Fresh Perspective?

Trading cryptocurrency in India has never been easy. Although it did not have complete legal backing, the crypto market thrived with investors and traders. Back in 2018, the RBI released a circular putting forth restrictions for crypto exchanges. It asked financial institutions to not serve the crypto trade and exchanges. In 2020, the Supreme Court struck down the RBI ban.

The hint on the new panel can be considered as the government's decision to bring a fresh perspective from experts regarding digital currencies and their trade. According to reports, there has been a prevailing view that the recommendations put forward by the Subhash Garg Committee in 2019 have become outdated. The committee led by the former Finance Secretary Garg had endorsed a complete ban on digital currencies.

One of the key focus areas of the panel would be to regulate crypto as digital assets instead of currencies. The new committee would revisit the earlier committee recommendations and also study the new proposal of an Indian digital currency, which is held by the RBI. Another major anticipated development would be the committee laying focus on blockchain.

Blockchain technology has fended many startups that have emerged in recent years. The capability of the technology to provide a safe and immutable infrastructure is hailed by various industries. Many financial institutions have embraced blockchain as a way to instill transparency in transactions. In such a  scenario, the new committee may find better ways to enhance the use of blockchain with much wider adaptability.

Reports suggest that India has almost 15 million crypto adopters and users and the largest cryptocurrency exchange WazirX, recently hit a record trading volume of USD2.3 billion. For a country with such huge traction of crypto investors, the new recommendations would hold great importance. The Indian crypto market was alarmed amidst the reports that the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 might bring a legal ban on the trade. But, Finance Minister Nirmala Sitharaman along with the Minister of State for Finance and Corporate Affairs, Anurag Thakur had declared that the state would carefully assess the crypto industry and is not planning to have an outright ban on it. The statement came as a relief to the traders. Still, there was a looming fear of strict restrictions on the crypto and this recent information would have put the traders and exchanges finally at ease.

According to Economic Times, Anurag Thakur had met with the concerned financial authorities in the nations and is also being considered as a part of the new committee. Further, the report stated that Nirmala Sitharaman is expected to receive a brief on the ongoing developments in the Indian cryptocurrency world, later this month, by her team.