The postponement in the government establishing the regulation on crypto has given rise to intense lobbying, with agencies anxious over the risks emerging from an unregulated section with utmost price unpredictability, posing a threat to investors, the majority of who don’t understand the instrument.
In addition to this, there are issues over the instrument being utilized for terror funding and money laundering, a problem that has been marked by other agencies worldwide.
While the Supreme Court had removed the ban applied by the Reserve Bank of India (RBI), the government had listed a bill on crypto to be presented during the Budget session of Parliament but with the session shortened, the regulation couldn’t make it.
During the monsoon session, the government remained mum on the fate of the suggested bill with FM Nirmala Sitharaman currently saying that it has been sent for clearance by the Union Cabinet prior to its introduction in the Parliament. The upcoming session is at least 2 months away.
Meanwhile, crypto exchanges have utilized the period to introduce a huge lobbying initiative with many regulatory and government agencies, creating issues. The exchanges have debated that a ban on virtual currency transactions will yield job losses.
While there is anxiety that a ban will lead to investors getting locked into the instrument, sources hinted that a 3-6 months window will be given to investors to quit.
Many officials have discarded the logic that cryptos are an asset class. Additionally, there is anxiety over the legal basis for the presence of some of the exchanges, which remain outside the jurisdiction of either RBI or SEBI.