Vaibhav Parikh, lawyer with Nishith Desai Associates, said: “We hope government realises that it is in India’s interest to regulate the crypto-currency business, instead of banning it. A ban will only move the transaction abroad, over which the government would have no visibility or control.”
The global crypto-currency market has grown multifold in recent years; futures trading in it has also started in America. If India decides to allow trading in these and, therefore, exchange platforms, there will be the issue of regulating every activity connected with the crypto-currency world. These include raising of funds by using these as the underlying product or Initial Coin Offerings (similar to the Initial Public Offers of equity in the capital market). Also, mining and trading in these.
The regulations in this regard are expected to prescribe stringent Know Your Customer rules, norms for customer protection, information sharing with government agencies, how to tax it and regulation of trading exchanges.
The contentious issue here, according to the source, is which entity should do the regulating. Since the RBI view is that, bitcoin or other virtual/digital crypto-currencies are not currency or legal tender, the committee will look at asking the Scutiries and Exchange Board of India (Sebi) to do so, said a source. Adding that Sebi has shown no eagerness to do so and, so, the government would need to decide.
Ajeet Khurana, chief executive at Singapore-based Zebpay, the largest crypto-currency exchange in India, says the right approach is that any deals in these currencies should be only through bank accounts, so that the money trail can be established.