In continuation of the possible softening of its stance on the virtual currency industry, the central government is now likely to consult Indian and global legal experts at the highest level on possibility of regulating or banning the crypto industry, before coming to any conclusive decision.
A report in the Indian Express today has quoted an unnamed government official as saying that a lot more is now known about cryptocurrencies than it was three years ago, when the Reserve Bank of India (RBI) issued a circular prohibiting banks from dealing or allowing transactions relating to virtual or crypto currencies.
Further, in 2019, a committee headed by former Finance Secretary Subhash Chandra Garg had recommended a blanket ban on all virtual currency assets.
It may be noted though that a 3-judge bench headed by Justice Rohinton Nariman had quashed the 2018 RBI circular prohibiting banks from facilitating crypto transactions, by a judgment dated 4th March, 2020.
The plausible legal and constitutional challenge to a blanket ban on cryptocurrencies rather than an approach to regulate the activity must also be weighing on the government’s mind and could be a reason for a re-evaluation.
Whilst the government has not yet clarified its stand on a proposed legislation to ban all private virtual currencies, Union Finance Minister Nirmala Sitharaman had earlier this year indicated of a ‘calibrated’ approach towards the industry. Further, the central government is looking at harnessing the blockchain technology in various areas such as digital record keeping, power distribution, supply chain management etc.