According to an anonymous source in the government and his interview with the news outlet Quartz on July 11th, India is looking at the possibility to start treating cryptocurrencies as commodities – instead of putting a blanket ban on them.
As the interview reads, the Finance Ministry panel in India recently ordered a study on cryptocurrencies which probably helped the government treat them as commodities. A senior government official with knowledge of this panel’s discussion also told Quartz that the government is doubting the decision to ban cryptocurrencies entirely.
As the source says, the main concern right now is the effective regulation of trading and identification ‘where the money is coming from’. As they added, “allowing it as a commodity may let us better regulate trade and so that is being looked at.”
The committee is right now mostly concerned about tracking investors and funds in order to fight money laundering and illicit financing, according to the official.
“Trade is not a criminal offence. Most of us trade in various asset classes in the stock market. So how is this [cryptocurrency trading] any different? What has to be in place is a mechanism to be sure that the money used is not illegal money, and to track its source is the most important thing.”
As Quartz reports, the former deputy governor at the Reserve Bank of India (RBI), R Gandhi, thinks that treating cryptocurrencies as commodities would demonstrate that crypto is not a real currency to investors.
“If these are used to settle transactions, then it acquires the nature of currency. So that is one thing that one needs to be wary of.
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But if people want to invest in a commodity then that is different, because then we can assume that they are aware of the risks involved.”
In May this year, the RBI announced that it will no longer provide services to people or companies that deal with cryptocurrencies – but that they are planning to issue their own cryptocurrency in the future.
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