Is India About To Reverse Its Crypto Trade Ban?

It is a decisive date for the local crypto industry that has been significantly suppressed in the past month by the Reserve Bank of India's ban on all banks' dealings with crypto-related businesses.

Brief history of cryptocurrencies in India India has not been perfectly cohesive in its stance toward crypto.

The situation became even less optimistic for cryptocurrencies after India's Ministry of Finance compared Bitcoin to a ponzi scheme and local banks - including State Bank of India, Axis Bank, HDFC Bank, ICICI Bank and Yes Bank - began taking strong action against crypto exchanges by either closing their accounts altogether or significantly curtailing operation.

If an Indian citizen wants to exchange crypto to fiat, then they will need to turn to marketplace exchanges or the black market, the Times of India explains.

New reality: outlawed crypto It would be fair to argue that the Indian government's hardline regulatory action thus far has only prompted the crypto industry to go underground, and has therefore become even less regulated.

As the Times of India reports, a number of opportunists used the RBI ban for their advantage by cashing in on the panic sales in India via "Arbitrage" - a strategy that implied buying BTC within the Indian market on the cheap, transferring it to a middleman in another country, who would then sell it there for a better rate and share the profit among the both parties involved.

Even more confusion was caused by a Bloomberg article quoting anonymous parties with "Direct knowledge" of the government plans to impose an 18 percent goods and services tax on crypto, as it could hardly coincide with the RBI ban - how can cryptocurrencies be taxed, when one can't even trade them? Nevertheless, such news indicate that more positive regulation might be on the way, or merely that different government agencies take varying approaches toward crypto, not coordinating their moves among each other.

The cryptocurrency panel cited was set up in December 2017 with the purpose of understanding the expanding crypto industry, and it includes Subhash Chandra Garg, secretary in the department of economic affairs; BP Kanungo, deputy governor of the RBI; and Ajay Tyagi, chairman of market regulator Securities and Exchange Board of India.

It is worth noting that on July 3, the court ruled not to grant interim relief to those affected by the ban at a hearing of the Internet and Mobile Association of India - organization comprised of members of several crypto exchanges that are challenging the RBI's stance.

The alliance, known as India Trade Connect, includes participants such as Axis Bank, ICICI and South Indian Bank.