An anonymous source in the government told news outlet Quartz that India will not ban crypto, but rather treat it as commodity.
According to Quartz, a Finance Ministry panel has ordered a study on cryptocurrencies, which may suggest that the government would treat them as commodities. A senior government official with knowledge of the panel’s discussion told Quartz that they doubt the government aims to ban cryptocurrencies.
The source said that regulators’ main concern is how to effectively regulate the trade and identify “where the money is coming from.” They added that, “allowing it as a commodity may let us better regulate trade and so that is being looked at.”
The official told Quartz that the committee is mostly concerned about tracking investors and funds in order to fight money laundering and illicit financing:
“Trade is not a criminal offence. Most of us trade in various asset classes in the stock market. So how is this [cryptocurrency trading] any different? What has to be in place is a mechanism to be sure that the money used is not illegal money, and to track its source is the most important thing.”
According to Quartz, former Reserve Bank of India (RBI) deputy governor R Gandhi opined that treating cryptocurrencies as commodities would clearly demonstrate to investors that crypto is not real currency:
“If these are used to settle transactions, then it acquires the nature of currency. So that is one thing that one needs to be wary of. But if people want to invest in a commodity then that is different, because then we can assume that they are aware of the risks involved.”
In May, the RBI announced that it will no longer provide services to any person or company that deals with cryptocurrencies, though the bank stated it is planning to issue its own cryptocurrency in the future. In January the Indian Finance Ministry criticized Bitcoin (BTC) and other digital currencies for their lack of intrinsic value. The Indian Finance Ministry said there is “a real and heightened risk of investment bubble of the type seen in Ponzi schemes, which can result in sudden and prolonged crash exposing investors.”