Cryptocurrency exchange in India is going through a highly unstable phase. The market in India had a roller coaster ride since December last year when Bitcoin made its way in the public domain. There has been a wide outrage in the media and bureaucracy about its regulation and more importantly security. Even though, crypto regulators are open to develop proper infrastructure and improve firewalling RBI hasn’t paid any attention.
In fact, RBI has issued a public warning in the public to avoid using virtual currency for any transaction. The government gave a timeline of three months to all the lenders who are dealing with cryptocurrency exchange for winding up their bank accounts. This was a clear warning for the investors who are operating in crypto space. Come regulators have challenged the declaration of RBI in Supreme Court. The next hearing of this matter is scheduled for July 20 which is going to give a new direction to this battle.
Indian Exchange Fight Against Ban
According to QZ, last hearing suggested the operative exchanges to engage with the Reserve Bank of India. Therefore, these firms sent out writings which would make their case in opposition to its prohibition orders. Anirudh Rastogi, managing partner of TRA Law stated that this ban is having opposite of the desired effect. Hence it is recommended that there must be suitable regulations that explain the concerns of RBI.
They have also mentioned that RBI could impose a ban on the firms that are violating the norms and not on the entire cryptocurrency exchange regulation. Regulators have emphasised on the importance of know-your-customer (KYC) and anti-money laundering (AML) guidelines which they are already following. Also, they suggested including passport details as well to tighten the security of the infrastructure and operations.
In the meantime, Modi government has formed a committee undersecretary of economic affairs of the finance ministry. They will create a draft on cryptocurrency exchange laws, however, the deadline for this project is extended to March 2019.
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