Report: India Evaluating Cryptocurrency Legalization Under Strong Regulation

The committee charged with providing recommendations for the regulatory framework surrounding cryptocurrencies in India is reportedly evaluating the legalization of the asset class under strong regulation. According to a recent report, “There is a general consensus that cryptocurrency cannot be dismissed as completely illegal.”

Also read: Report: Indian Government Panel Submits Crypto Recommendations

Legalizing With Strong Riders

An article published by the New Indian Express on Wednesday claims that the second inter-ministerial committee appointed to discuss the country’s stance on cryptocurrencies is not completely convinced of outlawing the asset class and is looking to legalize it under strong regulation.

The committee is headed by the Department of Economic Affairs’ secretary, Subhash Chandra Garg. It consists of officials from the Reserve Bank of India (RBI), the Securities and Exchange Board of India, and the Ministry of Electronics and Information Technology. An unnamed official was quoted by the publication as saying:

We have already had two meetings. There is a general consensus that cryptocurrency cannot be dismissed as completely illegal. It needs to be legalized with strong riders. Deliberations are on. We will have more clarity soon

Spirits Are High Despite Uncertainty

This news comes almost a year after the country’s finance minister, Arun Jaitley, declared during a speech in February that the Indian government “does not consider cryptocurrencies as legal tender or coin” and vowed that the government would take all the necessary measures to “eliminate the use of these assets in financing illegitimate activities.”

Jaitley’s comments echo similar remarks by the RBI. The central bank issued a circular in April, giving all banking institutions under its control a three-month window to close all ties with cryptocurrency companies.

The banking ban imposed by the RBI has influenced cryptocurrency trading behaviors in India. Exchange-escrowed peer-to-peer (P2P) trading volumes have reportedly soared in the months following the decision, indicating that the Indian people’s desire to use and hold cryptocurrencies has not been entirely dampened by the ongoing regulatory uncertainty.

Although the government of India has yet to announce a formal stance on the matter, the Indian crypto community remains optimistic that the government will end up lifting the ban and will formulate positive regulations in the upcoming months. The next meeting of the committee is scheduled for January 2019.

What do you think will be the outcome of these meetings? Will the Indian government embrace cryptocurrencies and lift the ban? Let us know in the comment section below.

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A Chinese Government-Controlled Bitcoin Alternative Is Reportedly in the Works

In the midst of a sino-U.S. trade war, the People’s Bank of China is working to develop its own cryptocurrency prototype. It apparently believes this centralized digital asset can ultimately trump BTC and perhaps even the U.S. Dollar.

Also read: Bibox Buys 100% Share of Decentralized Exchange Dex.top

A Love-Hate Relationship With Cryptocurrency

The government of China has been infamously hostile towards cryptocurrency-related economic activities like crypto trading, mining, P2P loans, and ICOs. But this doesn’t mean that the Chinese government disapproves of the underlying idea of Bitcoin. Although Xi Jinping’s administration has done much to kill the domestic cryptocurrency market, it’s currently at work developing its own secure, blockchain-based digital currency.

Reports reveal that the People’s Bank of China (PBoC) has registered 78 digital currency patents, of which 44 are blockchain related, since at least 2016, ranking the PBoC as the fifth most prolific patenter in the space, as has been reported by China’s IPR Daily.

Further, the PBoC has been actively hiring developers and economic specialists for its Beijing-based Digital Currency Institute, whose stated goal is to issue and distribute a blockchain-based currency.

Unprecedented Control

The project was originally conceived by the PBoC’s deputy governor Zhou Xiaochuan, with the intention of “protecting” China from Bitcoin, an asset it couldn’t control. In contrast with the decentralized digital currencies we know and love, the PBoC’s alternative could, in fact, allow the Chinese government to exert even greater control over the lives of the country’s citizens.

The current Deputy Governor of the Bank, Mr. Fan Yifei, announced earlier this year that once implemented, the Chinese-controlled cryptocurrency would replace the country’s fiat currency and would ultimately help the bank curtail risks associated with money laundering and other crimes.

Some of the patents filed by the PBoC reveal what the Chinese government has in mind for the future. According to a Bloomberg review of recent patent filings, the government not only wants to track its citizen’s everyday transactions, but aims to force banks to share all data related to potential borrowers before authorizing any type of transaction.

Also, the PBoC would be immediately able to prohibit any financial institution from dealing with “blacklisted” companies. Although there is no evidence that the bank intends to deny individuals from accessing financial services, the recent efforts by the Chinese government to establish a social credit system may point to this possibility.

Trump’s Administration May Hasten China’s Digital Currency Development

With the U.S. unrelenting in its current trade war against China, bankers and politicians alike are becoming increasingly interested in accessing an alternative payment method that would reduce the United States’ dominance of international financial markets, all while rumors of a Chinese-backed crypto are gaining momentum.

The recent arrest of Huawei’s CFO Sabrina Meng Wanzhou in Canada at the behest of the U.S. government has rekindled this discussion in China. Meng was arrested under charges of U.S.-imposed international sanctions on Iran, charges that may involve HSBC and the Standard Chartered Bank.

As reported by the South China Morning Post on Dec. 17, Richard Jerram, chief economist at Bank of Singapore, declared:

President Trump is promoting an ‘America first’ policy, so you cannot rely on America to keep its borders open for trade, or to rely on it to support the World Trade Organization or the International Monetary Fund. So you can understand why countries are looking for substitutes … In a world of fracturing of multilateral order, countries will be looking to reduce their dependence on the US.

Even though the Chinese yuan only accounts for 1 percent of the international payments market and 1.8 percent of all reserve assets held by central banks, China contributed 27.2 percent of total global GDP growth in 2018 alone. This performance makes it the single largest contributor to the current global economy despite the ongoing U.S. trade war and depreciation of the Chinese yuan.

Its position as an economic powerhouse and the current climate of political tension with the United States may compel the Chinese government to redouble its efforts to end U.S. hegemony by attacking the U.S. dollar.

Given that the world’s economy is slowly migrating towards digital systems, it wouldn’t be too farfetched to think that an alternative to the U.S. dollar might take the form of a digital asset much like the Chinese government’s proposed cryptocurrency.

Will China roll out its own cryptocurrency? Do you think such a digital asset could end up having consequences in the world stage? Let us know in the comment section below.

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Switzerland to Relax Laws to Accommodate Blockchain and Cryptocurrency Startups

The Swiss government has announced a new legislative approach to blockchain regulation in an official report. The document recognizes the technology as one of the most important recent developments for the financial sector in stimulating the country’s economy.

Also read: How Bitcoin Companies can Legally Operate in Switzerland

A Swiss Innovation Paradise

According to the report, the Swiss Federal Council’s main focus is on “ensuring the integrity and reputation of Switzerland as a financial center” and on better positioning the country to “exploit the opportunities offered by digitalization.”

The government’s plan is to create the best possible legal framework conditions so the country can continue to evolve as a leading and sustainable destination for fintech, blockchain, and innovative companies in a number of fields.

Although the report discusses the risk of cryptocurrencies being used for illegal purposes like the financing of terrorism, it maintains a positive attitude towards the technology, noting that the country’s laws should be amended to recognize encrypted digital tokens that are not backed by any physical assets. The Federal Council also made clear that it wants decentralized financial transactions to have a place in the legal code.

A Lighter Touch

The report mentions a proposal to give discretionary powers to the Swiss Financial Market Supervisory Authority (FINMA) to loosen regulations affecting decentralized securities trading platforms as long as their activities do not harm investors. This regulatory approach circumvents current legislation enacted so as to be aligned with the EU’s position on the subject.

Swiss economist Luzius Meisser expressed his belief that this approach to legislation could prove much more effective in a written statement, saying:

This shows once again how the traditional Swiss approach of having principle-based laws that give a lot of discretion to citizens and regulatory agencies are much more innovation-friendly than overly detailed European-style laws.

Switzerland has decided to achieve these objectives without creating a slew of new laws, opting instead to adapt current legislation to incorporate new technological developments. Mattia Rattaggi, spokesman for regulatory matters at the Crypto Valley Association (CVA), commented on the association’s stance on these announcements:

We feel that this approach best represents the principle of technological neutrality and is in line with the position taken by the CVA in the consultation process … Crucially, this approach ensures maximum consistency within the current legal framework while keeping it principle-based and flexible, while allowing changes to be adopted on a ‘need-to-regulate’ basis.

Proposed Changes

Switzerland’s Federal Council’s report outlines several modifications to the country’s laws but clarifies that there are no intentions to immediately change financial or insurance industry-related laws, as it considers that blockchain technology is still “in its infancy” when it comes to these sectors. The most important legislative changes proposed so far include:

• Amending the Collective Investment Schemes Act to include a new type of “limited qualified investment funds” with the intention of placing future innovative products on the market in a more time and cost-effective way.
• Start recognizing data as an asset by changing company bankruptcy laws. This would allow Swiss courts to handle and properly distribute digital assets when solving legal disputes.
• Widen the Anti-Money Laundering Act to include decentralized exchanges and allow law enforcement to dispose of third-party digital assets.
• Creating new authorization categories to give FINMA discretion to loosen regulations for decentralized securities traders and exchanges based in Switzerland.
• Amending the Financial Institutions Act and the Financial Market Infrastructure Law to make them more flexible towards blockchain initiatives.

What do you think about Switzerland’s regulatory stance on cryptocurrencies? Let us know in the comments section below.

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