India's Proposed Crypto Ban

Inside Bitcoin presented by Airbnb.

Presented by Subscribe | View in browser Dear Inside Bitcoin readers, Over the last few months, years even, the issue of what India is going to do regarding a ban on cryptocurrencies has remained a heated topic. If the government goes ahead with the ban, what's at stake? Will the market continue unaffected or will prices rise or fall? Due to the uncertainty surrounding it we have decided to dedicate today's newsletter to the issue and to, hopefully, get you up to speed on the latest developments. P.S. There won't be a newsletter on Monday as its Labor Day. Have a great weekend and check back Tuesday for some more news on the crypto market.       1. In the beginning. India's central bank, the Reserve Bank of India (RBI) issued its first official warning on the risks of trading and investing in cryptocurrencies in December 2013. It delivered its second on February 1, 2017 and third in December. In both instances, the bank highlighted the potential financial and security-related risks that traders were exposing themselves to. Undeterred by the warnings, investors in India continued to trade, so much so, that Localbitcoins, an exchange that accepts Indian rupees saw Bitcoin trading volume rise to 18.5 million rupees in April 2017. The rise in crypto trading can be linked to the government's decision to demonetize Rs 500 and Rs 1,000 currency notes to reduce the risk of money laundering.       2. First inter-disciplinary committee. Following heightened interest in the crypto market, the Indian government set up its first inter-disciplinary committee, which was established by the Department of Economic Affairs of the Ministry of Finance, in April 2017. The goal was to study, research, and eventually propose a framework for cryptocurrencies, including Bitcoin, in India. A report on the matter was due three months later. In a notice, at the time, the ministry of finance noted that the RBI continued to caution users of digital currencies relating to financial and security risks. In August 2017, a report was submitted to the recently deceased Arun Jaitley, former Indian finance minister. However, as per a publication at the time, the contents of the findings had yet to be made public.       A MESSAGE FROM AIRBNB Earn money by sharing your space. Millions of travelers stayed in an Airbnb last year. Turn your extra space into extra money. Learn More 3. Using his position to make a point. Due to a lack of regulatory oversight surrounding digital currencies, particularly in India, Indian Parliament Member Kirit Somaiya urged the government to declare it illegal. Speaking in 2017 at the Lok Sabha, India's House of the People, Somaiya said: "I urge upon the government to take a look at bitcoins. It is an illegal currency." In an interview, the same year, the MP stated that he didn't agree that people were doing business with crypto at their own risk and that he would see the RBI took action to stop it.       4. Ban or no ban? Set up in November 2017, an inter-ministerial committee, chaired by Subhash Chandra Garg, the Secretary of the Department of Economic Affairs, was established to look into the resolutions of the first committee and to determine the viability of cryptocurrencies in the Indian economy. A report in early December suggested that the panel had recommended a complete ban on cryptocurrencies with new legal framework within the RBI stating that any form of dealings with these assets would be treated as illegal. Yet, a few weeks later another report indicated that the panel was in favor of legalizing the market with tough rules in place. An unnamed senior official said that "cryptocurrency cannot be dismissed as completely illegal."       A MESSAGE FROM ODOO New Conference: Odoo Connect 2019 [Business Software]   Business leaders, entrepreneurs, CEOs/Founders, IT professionals, and developers from around the world come together for 3 days of workshops, presentations, and business software demos to help businesses connect their teams and scale their growth. Inside subscribers are invited to get a free pass! Free Pass   5. RBI bans banks from dealing with crypto. In April 2018, India's central bank issued a directive effectively prohibiting Indian banks from dealing with cryptocurrencies. It noted that in its public notices in 2013 and 2017, the RBI had repeatedly warned users of the risks associated with crypto trading. As a result, it had taken the decision, "with immediate effect," that financial institutions regulated by the RBI should not deal with virtual currencies or provide services to help deal with them. However, while the reserve bank issued a directive withdrawing support from the crypto market, it's not in a position to ban the use or trade of cryptocurrencies. That can only come from elected officials or the judiciary system. The Supreme Court has sought a response from the government for a petition asking for crypto regulation.       6. Draft bill recommending ban leaked. In July 2019, a bill suggesting the Indian government was considering a blanket ban on cryptocurrencies in the country was published on Twitter by blockchain lawyer Varun Sethi. While it had yet to be authenticated, it did mention a Digital Rupee, which would be issued by the RBI. The 18-page document stated that the Digital Rupee would be approved by Central Government and would be considered legal tender. It added that "no person shall mine, generate, hold, sell, deal in, issue, transfer, dispose of or use cryptocurrency in the territory of India."       7. Inter-ministerial committee recommends ban. Shortly after the leaked draft bill, "Banning of Cryptocurrencies and Regulation of Official Digital Currencies Bill 2019," the governmental panel suggested a ban on private cryptocurrencies in India. It also suggested proposed fines of up to 250 million rupees ($3.63 million) and up to 10 years in prison for the general use of crypto in the country. At the same time, it highlighted to the government to keep an "open mind" on the possibility of an official cryptocurrency. Many, however, have spoken out. According to Sidharth Sogani, the CEO of crypto and blockchain research firm Crebaco Global Inc., India could lose nearly $13 billion worth of the market if it's banned in the country.       8. The Supreme Court of India gives RBI two weeks to respond. Following court hearings, it gave the reserve bank just two weeks mid-August to justify its crypto ban, which the RBI agreed to. According to the court, the RBI had not responded appropriately to concerns from the crypto industry. The decision came after the court addressed two issues relating to India's crypto market: the 2018 banking restrictions by the central bank and the government's policy on cryptocurrency.       9. 40,000 Bitcoin to flood market. It's not known what impact, if any, a proposed ban on India's crypto market will have on the wider industry. However, Ajeet Khurana, head of Zebpay, a cryptocurrency exchange and wallet provider, thinks that 40,000 Bitcoin will hit the market if India goes ahead with the ban. At the same time, though, he doesn't believe that this will have a lasting impact on the price of Bitcoin.       10. What this means for you. It depends really. Are you someone who sees the proposed ban in India as an opportunity or a negative step for the market? Jaideep Reddy, a lawyer at Nishith Desai Associates who is contesting the RBI order, thinks that a ban in place would be the "most extreme step by any significantly sized economy." For others, a price dip may be a good opportunity to buy some more crypto while prices are low.       This newsletter was written and curated by Rebecca Campbell. She has been writing and reporting on various industries for the past 10 years, more specifically tech in the last three. Connect with her on Twitter. Editor: David Stegon (senior editor at Inside, whose reporting experience includes cryptocurrency and technology).       Ad Earn money by sharing your space. List your place now. Want to attend Odoo Connect? Visit the event page to get a free ticket at odoo.com/inside

We're Hiring! Learn more. | Sponsorship opportunities Copyright © 2019 Inside.com, All rights reserved. Our mailing address is: Inside.com 767 Bryant St. #203 San Francisco, CA 94107 Did someone forward this email to you? Head over to inside.com to get your very own free subscription! You received this email because you subscribed to Inside Bitcoin. Click here to unsubscribe from Inside Bitcoin list or manage your subscriptions.