India’s Reserve Bank Admits Crypto Trading is Not Illegal

Formal RBI clarifications were met with overwhelming approval by investors, retail operators and crypto exchanges. The move comes after a prolonged period of suspended decisions, hesitant investment climate and obstructionist banking systems. Digital industries have been pushing for clear regulation for a couple of years.

Crypto Trading in India Is not Banned

The Reserve Bank of India (RBI), the country’s central banking system regulator, revealed several days ago that crypto use and trading is not formally outlawed. The official notice was received with relief by digital asset investors and most online operators, as blockchain transactions were ostracized by mainstream banking for a number of years, one way or another.

Ever since RBI’s decision to forbid the nation’s banks to authorize cryptocurrency trade back in 2018, crypto markets and blockchain startups have been on the edge. Having gone through a couple of Draft Bills aimed at banning all private digital coins – none of which reached Parliament – financial markets received a boost by the news. With traditional banks still needed to facilitate digital payments and trade deals, crypto operators might look with more optimism to potential regulation of the sector.

A Lottoland Asia review reveals that many digital retail businesses accept crypto payments and might struggle to grow in online sales without formal clarity on the subject. Online entertainment websites that offer real money live betting like 10Cric , digital media and a number of tech startups – both Indian and international – feared the uncertain legal climate surrounding crypto assets might discourage both investors and consumers.

A number of legitimate companies with gaming or trading licences are forced to operate unregulated by the Indian government. Others simply move offshore.

Crypto Assets Still in Legal Limbo in India

In practice, the RBI told commercial banks and other financial intermediaries that they should disregard an earlier circular from 2018, ordering the same to block all crypto transactions in India. The concession comes somewhat surprisingly a year late, after the ban was struck down by the Supreme Court in 2020.

Most banks, card issuers and payment providers were still citing the former act as grounds for their decision to restrict dealings in digital assets. Many private consumers were vocal in their astonishment, even more so than larger cryptocurrency investors and blockchain startups.

Central authorities had repeatedly – although informally – brought up concerns over the legal source of such funds and possible links to money laundering, potentially funding terrorism and other criminal activity. Yet, so far, legislators have failed to promote a structured regulatory framework to ensure secure and prosperous digital markets.

More recently, New Delhi sources spoke about a possible introduction of a digital Rupee. Paradoxically, it would go against the benefits of a decentralized, peer-verified digital tender which is more flexible to consumer demand and allows for more democratic distribution of market profits.

Nevertheless, a Government Committee that was rumoured to be working on a regulatory framework might be able to provide some clarity and perspective for growth in the longer term. Indian tech startups, crypto investors and the young and tech-savvy desi society would certainly appreciate some more steps in the same direction.

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