Major Indian Trade Organization Speaks Out Against Proposed Crypto Ban

Nasscom, a major Indian trade organization, has said that it is against a blanket ban on cryptocurrencies, which was recently proposed by a governmental panel in the country. According to a report by local financial periodical The Economic Times on July 30, Nasscom commented:

"Nasscom believes that the recent proposal of the inter-ministerial committee of the government to ban all cryptocurrencies barring those that are backed by the government, is not the most constructive measure. [...] Instead, the government should work towards developing a risk-based framework to regulate and monitor cryptocurrencies and tokens.”

As per the report, Nasscom claims that crypto projects can always be tested in regulatory sandboxes prior to launch. Nasscom also reportedly believes that banning crypto will only serve to push away legitimate businesses who are already pro-compliance.

However, Nasscom does believe there is work to be done in terms of creating a regulatory framework to mitigate illegal activities in the crypto space:

"We should work towards creating a regulatory framework that will constantly monitor and prevent illegal activities. Regulating would allow the law enforcement agencies to be better equipped to understand these new technologies, enable them to gather intelligence on criminal developments and take enforcement actions.”

Nasscom was founded in 1988 and has over 2,700 member companies across the IT, business process outsourcing and other technology-related industries. 

India: a hostile regulatory environment

Despite there being no current official ban on cryptocurrencies in India, a number of crypto exchanges have closed as the Reserve Bank of India (RBI) has barred financial institutions in the country from offering services to crypto-related businesses. 

The circular prohibiting banks from offering services to crypto-related firms was released by the RBI in April 2018 and subsequently upheld by the country’s Supreme Court that May.   

In May 2019, the crypto exchange Coinome halted its services in India due to regulatory pressure. The exchange allegedly wrote in an email to customers:

“India is currently going through uncertainty on crypto guidelines and regulations. The government of India has not yet taken a decision on the regulatory framework for crypto exchanges or wallets. Further, the supreme court is yet to act upon the public interest litigation (PIL) on (the) regulation of crypto assets.”