The cryptocurrency marketplace in India is facing a siege from multiple parts of the government as several incidents amount to a buildup of the Narendra Modi–led government’s actions on regulating cryptocurrencies. If the reports out of India are true, the IMF’s “fastest growing country among emerging economies” may have to meet its 7.4 percent GDP growth target in 2018 without the boost that the digital currency industry has provided in the past.The Prequel: PM Modi Demonetized Rs 500 and Rs 1000 Notes in 2016Prime Minister Narendra Modi announced in late 2016 a “demonetization policy” in which the Rs 500 and Rs 1000 notes would no longer be considered “legal tender” as of November 9, 2016.
The reasoning given for the move: curbing the impact of fake currency, “black money,” corruption and terrorism on the nation’s economy. While the effectiveness of the campaign has been debated and politicized, the same reasoning the prime minister used on fiat currency bills is now being echoed about on the subject of cryptocurrency regulation.Finance Minister Jaitley to Parliament: Cryptos Not “Legal Tender”On January 2, 2018, Finance Minister Arun Jaitley answered questions before Indian parliament, in which he stated that “bitcoins or such cryptocurrencies are not legal tender and those indulging in such transactions are doing it at their own risk.” Aman Kalra, marketing head of New Delhi–based Bitcoin exchange Coinsecure, stated:If we listen to Mr. Jaitley’s comments carefully, we’ll notice that he never referred to bitcoin and other cryptocurrencies as illegal, and always mentioned that they are waiting for the report from the group that was formed for this purpose …Kalra’s point is an oft-repeated one in the industry, that excluding cryptocurrencies as “legal tender” doesn’t necessarily make their trade and usage illegal.
However, parliament member Muthuvel Kanimozhi asked the minister during Question Hour if the government would be seeking to regulate cryptocurrencies like bitcoin and ether given that India “accounts for more than 11 percent” of cryptocurrency trading globally. While actions to regulate major cryptocurrency coins by Indian heads of state may concern outside investors, given India’s voluminous participation in the markets, Kalra indicated that “not calling it a legal tender doesn’t worry us [Coinsecure] at all.
If the [government] had to ban it, they would have done it a long time ago.” Kalra also took the stance that the industry understands it takes time for the government to understand technology like Bitcoin “before coming out with regulations around it.”Frozen Bank Accounts — Fake News?On January 21, 2018, news reports from the Times of India indicated that several Indian banks (the State Bank of India, the ICICI, the HDFC Bank and Axis Bank) had frozen bank accounts associated with cryptocurrency trading. Users on Reddit debated the news with one user by the name of ubiquitous_raven, who stated (on reports inclusive of the frozen bank accounts notices):This is why the nation can never ride the wave towards growth and be early adopters of world-changing tools/tech/ideas Read more from bitcoinmagazine.com…
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