Chapter - 1: Cryptocurrency Control Worldwide
This expansive development is partly attributable to the fact that
cryptocurrencies have become commonplace over the past few years, causing more
national and regional authorities to deal with their regulation. The resulting
availability of a broader set of information about how different jurisdictions
handle the fast-growing cryptocurrency market allows for the identification of
emerging patterns, some of which are described below.
A fascinating feature of the fast-growing cryptocurrency market is the fluidity
of words used to describe the different items falling within its spectrum.
Although the various types of what are commonly known as cryptocurrencies are
similar in that they are largely built on the same type of decentralized
technology known as the implicitly encrypted blockchain, the language used to
describe them varies significantly from jurisdiction to jurisdiction. Some of
the terms used by countries to refer to cryptocurrency include digital currency
(Argentina, Thailand, and Australia), virtual commodity (Canada, China, Taiwan),
crypto token (Germany), a payment token (Switzerland), cyber currency (Italy and
Lebanon), electronic currency (Colombia and Lebanon), and virtual asset
(Honduras and Mexico).
One of the most common behaviors found across the jurisdictions surveyed is
warnings provided by the government about the risks of investing in the
cryptocurrency markets. Such warnings, mostly issued by central banks, are
largely intended to educate citizens about the difference between real
currencies issued and guaranteed by the state, and non-crypto currencies. Most
government warnings note the additional risk resulting from the high volatility
associated with cryptocurrencies and the unregulated nature of many of the
organizations that facilitate such transactions. Most also note that citizens
who invest in cryptocurrencies do so at their risk and that no legal recourse is
available to them in the event of a loss.
Some of the alerts provided by different countries also mention the incentives
created for illicit activities by cryptocurrencies, such as money laundering and
terrorism. Many of the countries surveyed go beyond simply warning the public,
extending their money laundering, counter-terrorism, and organized crime laws to
cover cryptocurrency markets, and requiring banks and other financial entities
to enforce all the due diligence criteria placed under these laws. For example,
Australia, Canada, and the Isle of Man have recently enacted legislation to
bring crypto-currency transactions and institutions to facilitate them in the
field of money laundering and counter-terrorist financing laws.
Some jurisdictions have gone even further and imposed restrictions on
investments in cryptocurrencies, the extent of which varies from one
jurisdiction to another. Some (Algeria, Bolivia, Morocco, Nepal, Pakistan, and
Vietnam) ban any and all activities involving cryptocurrencies. Qatar and
Bahrain have a slightly different approach in that they prevent their citizens
from engaging in any kind of local cryptocurrencies-related activities but allow
citizens to do so outside their borders. There are also countries that, while
not prohibiting their citizens from investing in cryptocurrencies, impose
indirect restrictions by preventing financial institutions within their borders
from facilitating cryptocurrency transactions (Bangladesh, Iran, Thailand,
Lithuania, Lesotho, China, and Colombia).
A limited number of the countries surveyed regulate initial coin offerings (ICOs),
using cryptocurrencies as a fundraising mechanism. Many (mainly China, Macau,
and Pakistan) of the jurisdictions that address ICOs prohibit them entirely,
although most prefer to concentrate on controlling them. The regulation of ICOs
and the relevant regulatory institutions varies in most of these latter
instances depending on how an ICO is categorized. For instance, in New Zealand,
particular obligations may apply depending on whether the token offered is
categorized as a debt security, equity security, managed investment product, or
derivative. Similarly, the rules applicable to a specific ICO in the Netherlands
depend on whether the token offered is regarded as a security or a unit in
collective investment, a case-by-case assessment.
Not every country considers the emergence of blockchain technology and
cryptocurrencies as a danger, albeit for various reasons. Although some of the
jurisdiction surveyed for this report does not accept cryptocurrencies as a
legal tender, they see promise in the technology behind it and are establishing
a cryptocurrency-friendly regulatory framework as a way of attracting investment
in technology companies that succeed in this field. Countries such as Portugal,
Russia, the Cayman Islands, and Luxembourg are in this grouping.
Many jurisdictions are looking to go further and establish their own
cryptocurrency program. This category includes a diverse list of countries,
including the Marshall Islands, Venezuela, the member states of the Eastern
Caribbean Central Bank (ECCB), and Lithuania. Additionally, certain countries
that have given alerts to the public about the risks of investing in
cryptocurrencies have also concluded that the size of the cryptocurrency market
is too limited to trigger sufficient concern at this juncture to warrant
legislation and/or a ban (Belgium, South Africa, and the United Kingdom).
One of the many questions arising from allowing investment in and using
cryptocurrencies is the taxation issue. In this regard, the challenge appears to
be how to categorize cryptocurrencies and the specific activities involving them
for purposes of taxation. This matters primarily because the applicable tax
bracket determines whether gains made from mining or selling cryptocurrencies
are categorized as income or capital gains invariably. The countries surveyed
classified cryptocurrencies differently for tax purposes, as shown by examples
||taxed as asset
||taxed as a financial asset
||taxed as foreign currency
|Argentina & Spain
||subject to income tax
||subject to income tax and losses are
||corporations pay corporate tax,
unincorporated businesses pay income tax, individuals pay capital gains
Mainly due to a European Court of Justice ( ECJ) ruling in 2015, gains in
investments in cryptocurrencies are not subject to value-added tax in the Member
States of the European Union.
Mining of cryptocurrencies is also excluded from taxation in most of the
countries surveyed for this study that have or are in the process of devising
tax laws. In Russia, however, mining which exceeds a certain threshold on energy
consumption is taxable.
Cryptocurrencies surveyed in a small number of jurisdictions are accepted as a
means of payment. Cryptocurrencies are recognized as a form of payment only by
government departments in the Swiss cantons of Zug and a municipality in Ticino.
The Isle of Man and Mexico also permit the use of cryptocurrencies as a means of
payment along with their national currency. Just like countries around the world
that finance various initiatives by issuing government bonds, the government of
Antigua and Barbuda allows the financing of initiatives and charities by
Chapter – 2: Cryptocurrency Law In Selected Jurisdictions
In terms of the legal recognition of cryptocurrency markets, the jurisdictions
included in this report may be categorized into two groups. In the first
category are countries that permit cryptocurrency markets to operate, and within
this group, some countries (including Belarus, Gibraltar, Jersey, and Mexico)
have been proactive in that they have enacted specific laws recognizing and
regulating the cryptocurrency markets, while others (such as Brazil, Argentina,
and France) allow the markets to exist but have yet to issue industry-specific
The second category of countries includes those that have taken steps to
restrict the cryptocurrency markets, mainly by barring financial institutions
within their borders from participating in them (China and Iran). Of the
countries that permit cryptocurrency markets to operate, many impose taxes.
However, the tax treatment of income generated from a cryptocurrency transaction
may vary depending on how it is categorized. For instance, in Argentina, a
transaction of this nature would be taxed in a manner similar to revenue
generated from the sale of securities and bonds, whereas in Switzerland
cryptocurrency is categorized as a foreign currency for tax purposes.=
Some of the countries included in the report do not levy taxes on cryptocurrency
transactions (Belarus and Jersey). Many of the countries that permit
cryptocurrency markets to operate have enacted laws subjecting organizations
that participate in these markets to rules designed to prevent money-laundering,
terrorism financing, and organized crime. These include Australia, Belarus,
Canada, Gibraltar, Japan, Jersey, and Switzerland. While a bill that would have
the same effect is working its way through the Brazilian legislative process,
countries like Argentina, France, and Mexico have yet to follow suit.
Chapter - 3: Crypto Asset Regulatory Strategy
One of the organizations has previously produced two major multinational reports
related to the regulation of cryptocurrencies. The first, published in January
2014, surveyed statements issued by government authorities regarding Bitcoin and
similar cryptocurrencies in 41 jurisdictions. That report demonstrated that the
debate over how to regulate cryptocurrencies was still in its infancy, with
authorities primarily warning the public on the risks of acquiring or
transacting with cryptocurrencies.
The second report, published in June 2018 and covering 130 countries, revealed
that many more jurisdictions had issued statements and guidance regarding
cryptocurrencies and that some countries had enacted or were considering
regulations or legislative amendments in certain areas.
This included, for
example, clearer indications of the tax treatment of cryptocurrencies, the
application of anti-money laundering and counter-financing of terrorism (AML/CFT)
laws to cryptocurrency exchanges and other businesses engaged in cryptocurrency
activities, and new warnings to consumers regarding the risks of investing in
cryptocurrencies. The broad survey of the policies of 130 countries was
accompanied by detailed reports on fourteen jurisdictions.
The following report covers 46 jurisdictions, including the European Union (EU),
and focuses primarily on regulatory approaches to crypto-assets created through
blockchain, or distributed ledger technology (DLT), in the context of the
financial market and investor protection laws. It also contains updated
information regarding the application of tax and AML/CFT laws to
cryptocurrencies in the countries covered.
Additional countries not covered in this report may also have taken actions in
one or both of these areas, but were included due to there being no existing
policies, or new or pending laws, related to financial regulation and oversight
of cryptocurrency activities. Some countries may also have issued more recent
public warnings than those included in the 2018 report.
The report shows that a number of countries are currently applying existing
legislation to crypto-assets that have the characteristics of securities or
other financial products or instruments, with regulators providing guidance on
However, around a dozen countries have enacted legislation that
specifically governs crypto assets and the entities that deal with them,
including exchange platforms and businesses providing custodian services. In
addition, a number of other countries are at various stages of developing
legislation on crypto assets, including in relation to establishing requirements
for initial coin offerings (ICOs).
Although not covered in the report, we note that the Strategic Hub for
Innovation and Financial Technology of the US Securities and Exchange Commission
has recently issued information on the potential application of federal
securities law to ICOs, indicating that the digital assets offered through an
ICO should be assessed based on their particular characteristics. Previously, in
2015, the Commodity Futures Trading Commission (CFTC) first found that virtual
currencies are commodities under the Commodity Exchange Act. The CFTC's
jurisdiction is therefore implicated when a virtual currency is used in a
derivatives contract, or if there is fraud or manipulation involving a
virtual currency traded in interstate commerce.
II. Application of Financial Markets and Services Laws
Legislation governing financial markets, products, and services in various
countries include requirements related to registration, licensing, and the
disclosure of information to investors, such as through a prospectus. Relevant
financial services in the area of cryptocurrencies may include, for example,
exchanges, custodial services, advisory services, and brokering.
A. Application Dependent on Characteristics of Particular Crypto Asset
The financial regulatory authorities in a number of countries covered in this
report have formally stated that existing financial markets, products, and
services laws are applicable to cryptocurrencies and/or to ICOs if the relevant
tokens have certain characteristics.
The authorities have published guidance on
determining the applicability of the laws on a case-by-case basis. The
jurisdictions that have taken this approach include Australia, the Bahamas,
Canada, Denmark, Finland, Germany, Israel, Jersey, Liechtenstein, Lithuania, New
Zealand, Singapore, Sweden, Switzerland, Taiwan, and the United Arab Emirates (UAE)
(with respect to the Abu Dhabi Global Market). The United Kingdom (UK) is
currently consulting on guidance in this area. In addition, it appears that a
similar approach would be taken in the Cayman Islands, although no official
guidance has been published.
Several of the relevant authorities have established innovation hubs
to assist entities in the financial technology (fintech) sector
navigate regulations and to encourage or enable innovation. This includes
Australia, Canada, Hong Kong, and Switzerland, with such an entity also proposed
B. Specific Extension of Securities Laws to Cryptoassets
A few jurisdictions have specifically brought cryptocurrencies into the
regulatory framework applicable to financial products and services through
regulations or official statements. This includes Hong Kong, Israel (where
virtual currency is included in the definition of financial asset),
Luxembourg (which has officially recognized tokenized securities as securities),
and Malaysia (where recent regulations bring all digital assets and tokens
created by blockchain within the securities regulatory framework, with specific
requirements applying for the registration of digital asset platforms).
III. Specific Laws on Crypto Assets
Several countries have recently enacted specific laws or regulations that govern
various activities related to crypto assets, including exchanges and wallets.
These cover matters such as technical requirements, governance structures, risk
management, information disclosure, and other investor protection issues. There
has been some regulation specific to ICOs, and this is an area in which several
countries are currently considering possible regulatory approaches.
The following countries have enacted new laws or regulations specifically on
cryptocurrency businesses or activities: Anguilla (in relation to tokens that
are not considered securities), Belarus (where the regulations are applicable to
residents of a government-established technology park), Bermuda, Gibraltar (in
relation to DLT services, with officially regulated blockchain exchanges
established), Indonesia (in relation to recognizing cryptocurrencies as
commodities that can be subject to futures trading), Malta, Mauritius (in
relation to custodian services), Mexico, Singapore (in relation to payment
services), UAE, Uzbekistan, and Venezuela (including the establishment of a
The following countries are currently at various stages of considering proposals
for specific legislation related to crypto-assets: Australia (recently consulted
on possible ICO regulation), the Bahamas (proposed payment instruments
legislation), France (currently considering an ICO bill plus additional
regulations), Germany (considering proposals to regulate blockchain securities,
non-security ICOs, and DLT), Gibraltar (regulation of ICOs and tokens), Israel,
Italy (considering a bill containing restrictions on token anonymization),
Japan, Liechtenstein, Malaysia (in relation to ICOs), Philippines (ICOs), South
Africa, Switzerland, and Ukraine.
Ireland appears to be at an earlier stage in this process, having established a
working group to monitor developments and consider whether policy
recommendations are required. The UK has also established a task force and is
working on developing relevant proposals for consultation.
In addition, the EU is currently reviewing whether existing financial
legislation applies to crypto-assets and ICOs and whether regulatory action is
needed. There are currently divergent approaches in the EU Member States and the
European Securities and Markets Authority has indicated that it supports the
introduction of EU-wide rules to ensure investor protection.
IV. Regulation of Crypto Assets Not Considered Securities
Where crypto assets are not considered securities or other financial products,
government authorities have indicated that other types of laws may be
applicable, or have stated more broadly that such crypto assets are unregulated.
For example, general consumer protection legislation is applicable in relation
to cryptocurrency activities in Australia, Canada, Finland, and New Zealand. In
other jurisdictions, payment services laws may be applicable, which requires
entities to be licensed in order to perform certain activities. This includes
the EU, France, Japan, Singapore, and the UK. In Italy, some cryptocurrency
businesses may be treated as money exchange operators.
Jurisdictions that have indicated that non-security cryptocurrencies, such as
utility tokens, and ICOs offering such tokens, are generally unregulated include
Brazil, Gibraltar, Isle of Man, Jersey, Spain, and the UAE. China and Indonesia
appear to have taken a stronger approach, essentially banning the use of all
cryptocurrencies as a means of payment and prohibiting financial institutions
from dealing in cryptocurrencies (except in relation to futures trading in
Indonesia). However, other laws of general application, such as property and
contract law, may be applicable to crypto-assets in China.
Some of the new cryptocurrency laws referred to above contain requirements
specifically applicable to entities that provide crypto asset custodial or
storage services, such as technical measures for protecting assets,
transactions, and client information. This includes, for example, Bermuda,
Indonesia, Mauritius, Norway, and the UAE. Specific measures proposed in other
countries, such as Liechtenstein, also contain provisions setting out the
obligations of providers of custodial services.
In Venezuela, the government has established the Crypto Assets Treasury with
responsibility for the custody, collection, and distribution of crypto assets in
accordance with presidential instructions.
In other jurisdictions, crypto-asset custodial services may be considered a
regulated financial service, with standard rules applying under the relevant
legislation. This includes Australia (if the relevant assets are considered a
financial product), Canada (where regulators expect certain technical measures),
and Switzerland (if the tokens are considered financial instruments).
VI. Application of AML/CFT Laws
Several of the countries covered in the report apply existing AML/CFT laws to
entities that deal with crypto assets, including the Cayman Islands (although
this may depend on the nature of the particular assets), Israel, Lithuania
(which is also considering regulatory changes in this area), Mauritius (in
relation to custodian services), New Zealand, Norway, Philippines, Singapore,
Sweden (depending on the nature of the assets involved), and Switzerland.
A number of other jurisdictions have made specific legislative changes to bring
crypto asset activities under the relevant laws. This includes Australia,
Belarus, Bermuda, Canada, France, Gibraltar, Isle of Man, Italy, Malaysia,
Malta, Norway, Japan, Jersey, Liechtenstein, Taiwan, the UAE, and Uzbekistan.
Relevant legislative changes are currently being considered in the UK. The EU
has also amended its Anti-Money Laundering Directive to bring wallet providers
and exchange platforms within its scope. These changes are in the process of
being implemented through legislative changes in the EU Member States.
The tax authorities of several countries covered by this report have published
guidance on the application of income or capital gains tax rules to
cryptocurrency activities, including Australia, Brazil, Canada, Denmark,
Ireland, Israel, Italy (with corporate tax), Japan, Jersey (about corporate
tax), Lithuania, Luxembourg, New Zealand, Norway, and Switzerland.
France has enacted specific provisions regarding the taxation of
cryptocurrencies, while there is a current bill in South Africa that covers this
issue, as well as in Ukraine, where an extended tax break is proposed. Other
countries that have stated that cryptocurrencies are not subject to tax include
Belarus (concerning residents of the government-established technology park),
Gibraltar (although exchanges must pay corporate income tax), and Uzbekistan.
The application of value-added tax or goods and services tax has also been
considered in several countries, with authorities stating that existing
exemptions apply to the buying and selling of cryptocurrencies. This includes
Australia (unless the entity involved in the transaction is a business) and the
EU Member States, following a European Court of Justice ruling on this issue.
Chapter - 4: Cryptocurrency Development In India
One year after setting up a specific panel to study and investigate
cryptocurrency, the Reserve Bank of India (RBI) introduced a cryptocurrency
regulation in April to ban cooperation between financial institutions under its
jurisdiction and business and crypto-currency related companies. The strategy is
eventually enforced as planned.
This was the first time this made a stance on cryptocurrencies, and the
subsequent decision by the Supreme Court to leave the moratorium intact
represented a dark day for cryptocurrencies investors and creators. Thus, while
people still look to the authority for the July 20th hearing's not-so-strict
policy, it's more likely that the future development of the crypto market will
head toward India's downward trend.
Nonetheless, if we look at the past 5 years since the first launch of Bitcoin in
India, we may find that the government kept an enigmatic approach toward cryptos
and there is a close connection between the strategy and the situation that the
currency is in.
Then this article helps to draft a timeline of the industries' growth relevant
Bitcoin first raised a big heat in India in 2013, with people from all social
classes entering the market and making instant or even speculating transactions
on it. 2013 was, though, also the year for people to continue improving the
technologies and business. At that time, the authority initially took an
off-hand measure, then released a post at the end of 2013 warning of the use of
the cryptocurrency that may incur hazards and risks, but no official regulatory
policy has been introduced.
And all of India's crypto business marched in the three-year gold era, with
cryptocurrency exchanges and start-ups arriving one after another; in realistic
words, the coins and the platform were incorporated into more usage cases.
Since India is a country where a large number of people, nearly 21 percent, who
have no bank accounts but still need to transfer money, because international
remittance has contributed a large part of national economies, coins and
technology have performed well to provide instant and low-cost services to the
The token even became an alternative to Rupee when the government announced that
80 percent of circulating currency would be demonetized. Then the government was
nice to crypto in that year and the technology behind it. They spent money to
further improve the technology and funded the coins, which in turn made the
media and the people know that the government was going to legalize
But things have not been working the way they wanted.
2017 was a tipping point for the industry's development: we began learning about
press reports about the coming extreme crypto-market legislation, and we saw
rapid spikes in token value and trading volume as the trend went down. In
reality, the speculation to impose tougher regulation and the market's weak
performance push the price down considerably. Bitcoin's price plunges from its
peak point, about $1,0000, to a much smaller price range of $6500-$6700 at the
moment, according to certain Datacom.
The RBI then eventually banned the crypto industry by imposing a ban under its
control to avoid activities between crypto-businesses and institutions. It also
sets data for entities to leave the field and forced exchange of cryptocurrency
to stop providing services to the public.
Over the years in India, the crypto-currency went back and forth. In fact, it's
the ambiguity of the government's attitude toward the industry that leads to the
cryptocurrency ups and downs. In the news, Tom Lee, an analyst for the Fund
Strat Global Advisors, said a lack of regulatory transparency placed a strain on
the market, and more institutional qualified investors could enter the market
with a consistent strategy. Not until 5 years after the first launch of the
tokens, then the Indian authority came up with a clear policy.
As the Supreme Court vetoed the cryptocurrency petition, then the ban issued by
RBI enforced on July 6th. There are already two exchanges to frozen their
accounts and acquire users to get their money out; they close the channel to
process fiat-to-crypto trading and start crypto-only trading until the lift if
it is imposed, future ban.
II. Ban lifted
On March 4, the Supreme Court lifted the Reserve Bank of India's (RBI) ban on
cryptocurrency transactions. The RBI had imposed this ban since April 2018,
which curbed a wide range of cryptocurrency-based activities in India. Now, with
this verdict, investors in cryptocurrencies and exchanges that allow trading in
them have got a new life. Will this work in favor of both?
It is a risk-and-reward mixed bag. Savvy consumers keep track of advances in
technology to reap profits.
Nevertheless, it is equally important to be informed
and conscious of creating a larger environment where creativity thrives and
risks are mitigated – as an industry, as a crypto-exchange, as a broker or as a
customer. Cryptocurrencies have gained acceptance but in today's volatile,
risk-averse environment they need to be seen as a double-edged sword. There is,
for example, no central authority to regulate, take ownership, or provide
security to protect crypto-assets.
There's the ease of use and real-time transactions, without any cross-border
restrictions. Anonymity is provided, but there is practically no provision for
the Know-your-Customer (KYC), which makes it a traceability issue. Two of the
key problems is that crypto identities can be used for illegal, untrackable
activities. It leaves it stressful. It takes just an internet-enabled device to
create a crypto wallet. With limited information technology literacy, this can
expose users to high-risk situations and make them potential targets for
cybercriminals. The resurrection of cryptocurrencies will depend on how the
ecosystem can grow while mitigating risks.
We need to initiate dialog with Indian policymakers and regulators and work
towards creating a regulatory framework for cryptography in India. South Korea
has recently legalized crypto. Japan and Australia likewise have a positive
outlook on crypto. Today more and more countries are developing crypto control.
Regulating crypto will be a massive success for India because it would lead to
more blockchain-focused businesses, more opportunities, and more government tax
Crypto is a class of new-age assets; we should not be pitting it against fiat
currencies. Currency is only one of the crypt's several potential use-cases. In
addition, the recommendations of the Financial Action Task Force (FATF)
explicitly note that cryptography is not a threat to the global economy, and can
be adequately supervised. Indeed, FATF has even submitted a standard report on
crypto-regulation to G20 countries, and India is a member of the G20. Both
crypto and fiat can coexist and crypto can actually help banks solve the
existing problems for millions of unbanked individuals.
Because of the note ban, Indians have had to use peer-to-peer (P2P)
communication networks, but the banking system will be even more popular because
it is more convenient for users. It would make dealing in crypto very convenient
Cryptocurrencies will act as a fundamental framework for a new generation of
global financial markets, allowing end customers to be their own banks
We've long believed that India will be one of the leading countries for the
adoption of cryptocurrency and digital assets as a natural advance towards a
cashless Indian economy. The Supreme Court's decision to support innovation by
legalizing bitcoin and cryptocurrency trading is a major step in the right
direction for both India's consumers and crypto businesses that want to serve
Not only will this decision expand the daily use of cryptocurrencies in India,
but it will also attract new talent and innovation that will support the
country's own blockchain and distributed ledger technology initiatives.
Cryptocurrency is a digital currency that runs on blockchain technology.
Countries that embrace public cryptocurrencies will attract talent and generate
domestic technology advantages that will help them win the blockchain technology
race. A recent example of this occurred in China, which partially relaxed
regulations around cryptocurrency mining following President Xi's speech
announcing blockchain technology as a national priority.
India has developed a strong position in developing next-generation blockchain
and distributed ledger technologies, and this infusion of talent and enhanced
regulatory clarity will only help Indian firms develop regional and global
III. Present Scenario:
Some Indian banks ignore the Supreme Court verdict on cryptocurrency, RBI urged
to rectify. Some major banks, including HDFC and IndusInd Bank, are still
arbitrarily declining to process crypto transactions despite the Indian Supreme
Court quashing the central bank's ban on cryptography. Banks say they await
instructions from the Reserve Bank of India (RBI) to lift the ban.
Some major banks crypto transactions are still declining
The Indian cryptocurrency community's disagreement with the central bank, the
Reserve Bank of India (RBI), over the banking ban persists. While the Indian
Supreme Court squashed the RBI's circular on March 4, several banks also refuse
to reopen accounts for crypto businesses.
In an attempt to rectify the situation, Mohammed Danish of Indian law firm
Fintech Lawyers sent a letter to Finance Secretary Ajay Bhushan Pandey and two
RBI officers regarding this arbitrary denial of banking services by certain
banks for sale/purchase of crypto assets. Emphasizing the Supreme Court order,
Few instances have come light which clearly suggests that bank(s), including
HDFC and IndusInd Bank, are still arbitrarily declining to process the
transactions for sale/purchase of crypto assets.
The Supreme Court of India ruled on March 4 that the RBI circular which banned
banks from providing services to crypto businesses was unconstitutional.
In most of the cases, the banks have not given any written communication but
verbally informed their customers that they are waiting for RBI notification in
this regard, The prosecutor continued. As of March, HDFC is India's largest
market capitalization bank and is the largest private-sector asset lender in the
country. In April 1994 Dr. Manmohan Singh, India's then finance minister,
formally inaugurated IndusInd Bank.
In April 2018, the RBI released a circular barring licensed financial
institution from offering services to crypto firms. The ban came into effect
three months later and several crypto-stakeholders filed written petitions
immediately challenging the ban. The Supreme Court eventually found after about
two years that the circular was unconstitutional.
Lawyer Says Banks' Refusal Is Illegal and Unjust.
Now when the said circular doesn't exist anymore, the banks (RBI regulated
entities) must comply with the order of the Supreme Court and start providing
banking services for sale/purchase of crypto assets impartially as they provide
services for all other legitimate transactions, Danish wrote. It is pertinent
to mention that the order of the Hon'ble Supreme Court has given no specific
direction to RBI for issuing a separate notification to the banks for compliance
of the said order. He asserted:
Banks' refusal to provide services for sale/purchase of crypto assets is
absolutely illegal, unjust and arbitrary in the eyes of law and the same amounts
to wilful disobedience to the order of the Hon'ble Supreme Court.
In view of the above, we request you to issue official communication to all the
banks as soon as possible with regard to the matter under discussion, he
Banks Waiting for RBI's Instructions
The Economic Times interviewed some bankers on the crypto banking ban issue.
Some told the publication that Lenders would open their channels for cryptocurrency trade only on explicit regulatory orders from either the central
bank or the parliament, as the legality of such trades is yet not clearly
defined in India. An unnamed senior banker was quoted as saying:
We will be guided by RBI's directions on the matter and once we get the clarity
we will act appropriately. As banks, some of the concerns we had on
cryptocurrencies were around security, use of money, and traceability
Sathvik Vishwanath, CEO of the local crypto exchange Unocoin, explained: I
don't believe that RBI instructs the banks to help the crypto industries. They
are not obligated to do so due to the decision of the Supreme Court. Another
bank executive observed that a clear supervisory framework for regulating
cryptocurrencies has yet to be established for the financial sector and the
Since February last year, the Indian government has been considering the
Banning of Cryptocurrency and Official Digital Currency Act Regulation 2019.
The bill seeks to ban all except state-issued cryptocurrencies. It was
introduced by an Inter-Ministerial Committee (IMC) led by former Finance
Secretary Subhas Chandra Garg who has since withdrawn from his government role.
This bill was to be introduced in parliament at last year's winter session but
it was not.
The central bank is not happy with the Supreme Court verdict quashing its
cryptocurrency circular and is reportedly planning to file a petition for review
on the grounds that the anonymous nature of crypto transactions poses a systemic
risk to the banking system in India. The RBI has 30 days to send the demand.
Meanwhile, it was reiterated in court that cryptocurrencies, such as bitcoin,
are not banned in India.
IV. Indian State Ministry Discusses Cryptocurrency Plans With Founders
of Crypto Bulls Roadshow.
An Indian state official recently met with the founders of the India Crypto
Bulls initiative and discussed cryptocurrency development, investment, and
innovation in India. News.Bitcoin.com talked to Kumar Gaurav, one of the
founders, to find out more about the meeting.
India Crypto Bulls Founders Meet Rajasthan Official
Amin Pathan, chairman of the Dargah Committee in Ajmer, under the government of
India's Ministry of Minority Affairs, recently met with the founders of the
India Crypto Bulls initiative — the team that is organizing a nationwide
roadshow in 15 major Indian cities.
News.Bitcoin.com talked to one of the India Crypto Bulls founders, Cashaa CEO
Kumar Gaurav, about the meeting. He explained that Pathan is the president of
the Dargah Committee, Ajmer, which is one of the biggest holy pilgrimages of
Muslims all over the world. He is exploring a blockchain solution to digitize
various assets governed by his ministry to finish any corruption due to title
unclarity. Pathan is also chairman of the Rajasthan State Haj Committee (State
Minister), former State President BJP Minority Morcha Rajasthan, and the vice
president of the Rajasthan Cricket Association.
Pathan discussed his views regarding India's crypto development, investment, and
innovation. He told the India Crypto Bulls founders:
The state is looking to host a conference with participants including Indian
administrative service officers who are concerned and relevant with the key
affairs relating to bitcoin and other digital asset financial services.
Moreover, the upcoming conference in the state by Rajasthan minister will also
comprise of training sessions on compliance, how cryptocurrency investment can
be matured, precautions that an investor has to follow before dealing or
planning to invest in cryptocurrency and several other factors, the team
conveyed. They believed India Crypto Bulls' roadshow is closely aligned with
their vision of hosting upcoming conferences.
Gaurav Dubey, O1ex CEO and the other founder of India Crypto Bulls, was quoted
as saying, We are sure that India Crypto Bulls will be able to spread the right
knowledge on Cryptocurrencies in Rajasthan with tremendous outreach, under his
wise guidance. Cashaa's CEO further told news.Bitcoin.com:
He [Shri. Pathan] supported the nationwide Indian Crypto Bulls roadshow and will
host the event in his city Jaipur, and Udaipur.
India Crypto Bulls is an initiative by Gaurav and Dubey. They had planned to
launch a roadshow across about 15 cities in India in early April to prepare the
country for the next crypto bull run and educate the public regarding
cryptocurrencies. However, due to the current coronavirus pandemic and the
directives from the Indian health ministry, the roadshow has been postponed and
will be rescheduled for a later date.
Crypto Gaining Traction after Supreme Court Verdict
The cryptocurrency ecosystem in India is rebuilding after the damage done by the
April 2018 circular issued by the central bank, the Reserve Bank of India (RBI),
which banned banks from providing services to crypto businesses. The ban forced
several crypto businesses to shut down as a result.
After multiple delays, the Indian Supreme Court finally ruled that the circular
was unconstitutional. The court lifted the ban on March 4. Since then, crypto
exchanges have been busy bringing back INR banking support. Several global
companies also plan to expand into India and invest in Indian crypto startups.
Furthermore, the Indian government is reportedly planning to regulate the crypto
space instead of imposing an outright ban as recommended by the interministerial
committee (IMC) headed by former Finance Secretary Subhash Chandra Garg.
Commenting on his meeting with Shri. Pathan, Gaurav said:
I found Shri. Amin Pathan Ji an inspiration for youth in India and abroad who
lost hope from Indian politicians. After meeting Aminji, I feel confident that
under his leadership and with the backing of BJP, emerging technologies like
blockchain will get the strong support of Indian govt.
Welcoming Pathan onboard the India crypto bulls roadshow, he indicated:
The meeting concluded with a futuristic talk on crypto adoption and development
in India. In addition to this, the ministry invited India Crypto Bulls to
Rajasthan as a way to emphasize on the crypto discussion.
So this is how cryptocurrency is developing in India.
Cryptocurrency offers a new, effective, and attractive model of payment methods
that can boost companies' and operators' revenues. It also provides an
alternative method of payment, apart from real money, that enables users to make
financial activities such as buying, selling, transferring, and exchanging
Although cryptocurrency platforms open many channels for digital financial
transactions and provide a new form of currency with different mechanisms and
methods, they are not controlled and regulated as they deserved. The research
analyzed cryptocurrency platforms and extracted many concerns and challenges
that put such a financial system under the risk.
The lack of legislation is considered as the main concern in cryptocurrency
systems. Almost a clear picture of the size of cryptocurrency use has been drawn
from my analysis of the current cryptocurrency literature and from the conducted
Although the pilot a study has been conducted with a relatively small sample,
but the results showed me a preliminary perception about the use, the growth,
the trust of using and future expectations of cryptocurrency. one can now
realize many indications that can provide initial answers to the research
My analysis indicates that cryptocurrency is very likely to be the next currency
platform due to the large volume of cryptocurrency that is flowing in different
systems, the huge expanding and growing of using and implementing
cryptocurrencies and the opportunities that cryptocurrency systems offer.
Moreover, the confidence and trust rate of using cryptocurrency is noticeably
high as it can be seen in several cases that have been stated in this paper
besides the survey results. However, users have not realized the full picture of
In fact, many cryptocurrency firms do not deserve that much of trust yet. Many
concerns, challenges, and issues are existing in many cryptocurrency platforms
and they are clearly outlined in the above sections of this paper. Until
cryptocurrency is being well regulated and controlled, users need to take extra
precautions of using such virtual money.
The future of the Cryptocurrency concept is promising, revealing more
opportunities to bring positive changes and progress to e-Business and e-Payment
sectors. With the rapid progress and improvement of technology, cryptocurrency
will not stop progressing. There are advanced steps towards improving and
expanding the cryptocurrency concept since our study was conducted. More and
more vendors are accepting payment with different types of cryptocurrency and
many people are now more aware of potentials and opportunities that CC can
New forms of virtual currency have also been emerged and spread around the world
recently. M-Pesa as an example, which is a form of CC that offers secure
payment, has been introduced in Kenya in 18 2007 and now, it has been expanded
into many other countries in Africa, Asia (including India), and Europe creating
a highly popular payment service. The Cryptocurrency field creates a lot of
research opportunities and many studies need to be done in order to provide
scientific content. The correlation between real financial laws and the
legislative status of implementing the cryptocurrency platform needs to be
studied further from various different perspectives. Moreover, the adoption and
acceptance level also needs more consideration and more analysis with large
Trust and confidence are important factors that need to be investigated further
in terms of using and trading the Cryptocurrency forms. The further research
scope can be extended to developing use-cases for applications of cryptocurrency
across different sectors in India.