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Warning: India is Heading Towards Clueless Bitcoin Regulation, Here’s Why

When the Reserve Bank of India (RBI) warned its citizens about the risks of trading and holding cryptocurrencies in December 2013, it was a reformist move. Cryptocurrencies, or should we say bitcoin, was a new phenomenon back then.

Every country out there had its share of doubts about it. And correspondingly, they all, like India, warned their citizens of its potential ills.

Five years and three months later, countries started to learn more about bitcoin and its unique technological capabilities to reform finance. Developed economies such as the US, the UK, the European Union, Singapore, Japan, and South Korea moved from being cautious to more welcoming.

But India remained where it was, still looking at bitcoin as if it was a bomb waiting to go off at any moment.

The only concrete steps the world’s sixth largest economy took all these years were: raid cryptocurrency startups, portray bitcoin as a scam via half-baked media coverages, and – to top all – ban its banking sector from offering services to cryptocurrency industry. When the Western economy had moved forward with bitcoin, India started walking backward.

The crypto sector fought back hard. It took the RBI to the Supreme Court of India to challenge its ban. After several delays, the apex court eventually directed the RBI and the government to come up with a bitcoin regulation – that too, in just four weeks.

It leads the Indian crypto sector to ask that how does an authority, which sleepwalked through the entire Supreme Court process, can suddenly introduce a regulatory framework for a complex cryptocurrency economy.

Less Time, More Work

There is no clarity about how the Indian government perceives decentralized, permission-less blockchains. In its earlier comments, the RBI clarified that it could not regulate cryptocurrencies because the Indian laws had never defined such asset classes. At the same time, Indian securities regulators, the Securities and Exchange Board of India (SEBI), remained mum on the matter.

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