‘Avoid ban on private cryptocurrencies,’ recommends Indian tech think tank
The government should avoid a ban on private cryptocurrencies, according to a report by an Indian non-profit organization that has been cited by lawmakers for reference in the past.
The report by the Centre for Internet and Society (CIS) comes forward as the Indian government is looking to introduce a crypto bill that will reportedly ban most private cryptocurrencies but first it needs to be approved by the ruling Cabinet and then the parliament. However, recent reports suggest that this process could be delayed by several weeks.
The CIS report recommends reiterating that crypto is not legal tender and then taking “steps to classify crypto-assets under the existing financial framework.”
Another interim recommendation is to give existing financial regulators and watchdogs, such as the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) jurisdiction over crypto-assets. For example, classifying crypto-assets as derivatives to grant SEBI jurisdiction, so the regulator could make its existing know-your-customer (KYC) and anti-money laundering (AML) rules applicable to crypto exchanges.
The report further reads that SEBI could also decide to classify crypto as collective investment schemes, which would lead to crypto exchanges issuing SEBI-compliant crypto assets. Similarly, crypto can also be notified as derivates giving RBI jurisdiction.
In means of classification, the report explained that since crypto-assets do not fit into any of the existing classifications of financial instruments they need to be regulated through a specific and standalone regulatory framework.
CIS strongly recommends a specific regulatory structure for stablecoins, one that is held to a higher regulatory standard than other crypto assets. Additionally, the recommendations lean on global consensus on stablecoin regulation that rules applicable to stablecoins should be similar to the rules applicable to banks.
The report also suggests a license and registration system for companies that are involved in crypto-related businesses, which would allow state governments to effectively monitor them. Limitations on crypto mining and appropriate taxation were also part of the report’s recommendations.
The key recommendation is the establishment of a separate body to oversee and research changes in the crypto market, which would then make recommendations to RBI or SEBI, whichever becomes the eventual regulator.