Editor's Note: This article comes fromNakamoto Shallot (ID: xcongapp), Author: Yaoping, published by Odaily with authorization.
Editor's Note: This article comes from
Nakamoto Shallot (ID: xcongapp)
Nakamoto Shallot (ID: xcongapp)
, Author: Yaoping, published by Odaily with authorization.
With the lifting of the ban, the encryption trading platform that had previously withdrawn from the Indian market plans to restart its services. The Indian encryption trading platform began to provide Indian rupees to buy cryptocurrency business. Many encryption companies plan to expand their business in the Indian market. The Indian encryption industry is showing signs of recovery.
Looking back at the development of the encryption industry in India, behind the staged results of the duel between the encryption industry and the Indian central bank is the "legal battle" that has lasted nearly 23 months.
Xiaocong sorted out the main trends surrounding the development and regulation of the encryption industry in India in the past three years, including the struggle and efforts of practitioners in the encryption industry in India, the persistence of the RBI in maintaining the domestic banking system, and the Indian government’s decision on cryptocurrency regulation. Formulate and perfect…
It can be seen from this that the hearing and trial process of the RBI ban by the Supreme Court of India is also a difficult struggle for the Indian encryption industry. The various roles have experienced a complex game and mediation. The development of the encryption industry is full of difficulties and uncertainties. Sexuality, and these, may not be the current status of the entire encryption industry today.
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The second half of 2017: the digital currency regulation winds up, and the Indian central bank and the government begin to feel uneasy
Since the second half of 2017, due to the sharp increase in digital currency transaction volume and ICO projects, the Chinese government has completely banned ICO and digital currency transactions. Wind blows.
At that time, the Indian digital currency trading market was also very frenzied. According to a survey by the Indian income tax department, there were 600,000 active digital currency traders among the 9 digital currency exchanges in India, and 2.5 million people registered for transactions.
The Reserve Bank of India (RBI) has determined that cryptocurrency is not legal tender from the very beginning, saying that it will not use it as any means of payment or settlement, and has never authorized any company in India to carry out digital currency business. Indian government officials are also rampant against digital currency. Expressed concern that Bitcoin and other cryptocurrencies will lead to an increase in terrorism financing, money laundering and tax evasion.
During November-December 2017, the RBI and the Ministry of Finance issued four warnings to the market on digital currencies such as Bitcoin. The Ministry of Finance of India called digital currencies a "Ponzi scheme" and set up a special government committee to study cryptocurrency-related issues. policy.
At the same time, some initiatives taken by the RBI and the tax department seem to indicate something.
In December 2017, the Indian taxation department began to raid Bitcoin exchanges, and then began to send taxation notices to about 500,000 Bitcoin traders across the country to regulate trading behavior, but the details of relevant tax implementation are not mature.
Beginning in January 2018, the RBI and the Modi government jointly adopted restrictive measures on virtual currencies, mainly by restricting deposits and withdrawals of Indian rupees (INR) to curb bitcoin exchanges. RBI also warned banks to strengthen supervision of bitcoin and digital assets Review of currency transactions.
Under regulatory pressure, many banks began to declare that customers are prohibited from buying or trading cryptocurrencies. Some exchanges (such as Koinex, Coindelta, etc.) were closed by banks for digital currency accounts, and transactions began to be restricted. Two large exchanges, Btcxindia and Ethexindia, also announced From March 5, 2018, trading was suspended, and the shock of the Indian cryptocurrency market began.
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Crypto Practitioners Seek “Reversal” as Central Bank of India’s RBI Ban Issued
On April 5, 2018, the Central Bank of India issued a circular on the bank's service ban on digital currency (referred to as the RBI ban), prohibiting financial institutions regulated by RBI from approving users to purchase digital currency, and prohibiting banks from providing services for companies involved in or settlement of digital currency. Services, if such services have been provided, must be terminated by July 5, 2018.
After the promulgation of the ban, the average daily trading volume and token prices of major crypto exchanges in India have dropped sharply. The heads of mainstream exchanges are all resentful and disturbed by the ban. Many exchanges have begun to seek to move their headquarters out of India. At the same time, several exchanges submitted petitions and appeals to the Supreme Court of India against the RBI ban.
On the day the RBI ban was announced, a petition against the ban was submitted on Change.org (a social welfare petition website), which received more than 17 million signatures within three days.
In mid-April 2018, the CoinRecoil exchange announced that it had submitted a petition to relevant departments, claiming that the RBI ban violated the Indian Constitution;
In addition, Kali Digital Exchange and Indian technology company Flinstone Technologies Pvt.Ltd filed an appeal in the Delhi High Court against RBI’s crackdown on the encryption industry.
Many petitions and appeals seem to have brought some hope of "reversal", and the Indian digital currency market has heated up again. Many people took advantage of the three-month transition period of the RBI ban to trade, and many believed that banking channels could not be used and could turn to currency trading platforms.
However, the Supreme Court of India finally rejected the petition submitted by representatives of 11 different digital currency companies before, saying that the RBI ban is still in effect, and there is no buffer period for the RBI ban, and banks should still stop digital currency transactions on July 5, 2018. Currency exchanges provide services.
In response to the previous lawsuit, the Supreme Court said it would hear all motions against the ban on July 20, two weeks after the ban began.
As the implementation date of the RBI ban approaches, digital currency exchanges in India have to make compliance adjustments, stop deposits and withdrawals of Indian rupee (INR), promote currency trading and other encrypted asset allocation businesses, and so on.
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RBI ban takes effect, Indian encryption industry shifts from "front stage" to "behind the scenes"
Indian encryption practitioners failed to overturn the RBI ban through petitions and appeals, so the ban finally came into effect on July 5, 2018.
The central bank of India has a firm attitude towards the implementation of the RBI ban, and its position has not changed. It has publicly stated that there are three reasons for implementing the RBI ban:
One is for the protection of investors, the other is that digital currency lacks inherent value, and the third is that digital currency has anonymity.
Meanwhile, the Indian government’s regulatory framework for cryptocurrencies remains elusive, and India’s Supreme Court has repeatedly delayed hearing appeals against the RBI’s banking ban.
Many Indian exchanges can only deal with the ban in their own way.
In order to circumvent the RBI ban, Indian exchanges have stopped fiat-to-digital currency services and turned to currency-to-currency trading, competing with large exchanges such as Binance, and some have turned to peer-to-peer trading platforms such as LocalBitcoins, or launched cryptocurrency ATMs
According to a survey conducted by the blockchain community Incrypt, more than 80% of blockchain developers and startups have moved to digital currency-friendly countries such as Singapore, Dubai, and Switzerland.
For example, Zebpay, one of the largest cryptocurrency exchanges in India, announced its closure at the end of September 2018. Zebpay CEO Ajeet Khurana said that the environment in India is seriously unfavorable to encryption business, and the restrictions on bank accounts have greatly weakened their business transaction capabilities. , Zebpay’s 24-hour transaction volume plummeted 92% in the three months after the ban was imposed. Exchanges such as Coindelta and Koinex also announced in 2019 that they were forced to cease operations.
In addition, after the introduction of the ban, many cryptocurrency trading businesses were forced to shift from "front stage" to "behind the scenes", and the concerns of law enforcement agencies have also been staged step by step.
Other transaction methods for mainstream cryptocurrencies (such as BTC and ETH) have begun to appear in India, including various Dabba transactions (the process of processing transactions through illegal channels other than the official platform). The original intention of the RBI ban to prevent the flow of illegal funds seems to be be thwarted.
Jaideep Reddy, a well-known Indian lawyer and an encryption market consulting expert, is critical of the RBI ban. He believes that this hostile policy will not have the desired effect, but will instead drive the encryption economy underground and make the existing situation worse.
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The Long Game: Indian Crypto Industry VS Government Regulation and RBI Ban
Due to the lack of legal clarity of the Indian government and related regulatory agencies, India's position on cryptocurrency issues has been in a gray area. Since the RBI ban was launched by the RBI, stakeholders in the Indian encryption industry have begun to submit petitions and appeals through various channels. , to challenge the ban.
From the official implementation of the ban in July 2018 to the cancellation of the ban in March 2020, during the 20-month period, all parties have experienced a long and tortuous game process.
Indian encryption community: While quickly adjusting its own business, it is seeking a positive legal judgment from the Supreme Court of India.
The Internet and Mobile Association of India (IAMAI), major cryptocurrency exchanges and other institutions have never given up seeking the "vitality" of the Indian encryption industry.
Not only actively contacted the Supreme Court of India, initiated petitions to the Indian government departments and the Supreme Court many times, challenged and reconsidered the RBI ban, but also insisted on calling on the government to implement active supervision of cryptocurrencies and influence the government’s supervision of cryptocurrencies with practical actions draft.
The Central Bank of India: While resolutely maintaining the implementation of the RBI ban, it is studying the possibility of launching a digital currency with Indian characteristics.
The central bank of India defended the implementation of the RBI ban, forming the most direct confrontation with the Indian encryption community. In the past 20 months, the Indian central bank's stance on cryptocurrencies has been consistent, arguing that the implementation of the RBI ban is for the protection of investors and entity financial institutions.
And has submitted multiple affidavits to the Supreme Court to clarify its position on cryptocurrencies such as Bitcoin and explain the legality and rationality of the RBI ban.
At the same time, under the general trend of the rise of the global digital currency wave, the Central Bank of India is also continuing to study the advantages and feasibility of introducing central bank digital currency.
Government of India: Actively formulate and adjust cryptocurrency regulatory regulations and drafts.
The gap in encryption regulatory laws and regulations is the root cause of the continued embarrassment of the encryption industry. In the face of this emerging thing, the Indian government dare not rashly introduce regulatory bills, and can only deepen the supervision of the encryption field through continuous research decide.
In 2017, India established an inter-ministerial committee, led by Subhash Chandra Garg, former Secretary of the Department of Economic Affairs (DEA), dedicated to research and proposing encryption regulatory recommendations, and finally submitted a bill to the Ministry of Finance in July 2018 Draft report. India’s Ministry of Finance submitted an affidavit to the Supreme Court in December of the same year, expressing the government’s intention to take actions in regulating or banning cryptocurrencies.
As soon as the content of the Encryption France draft of "completely prohibiting the trading and issuance of all types of cryptocurrencies and closing all cryptocurrency exchanges" came out, public opinion in the market was in an uproar. Most of the voices opposed this "one size fits all" approach and asked the government to A suitable crypto regulatory framework should be established.
In addition to Facebook’s Libra project, global governments and central banks have begun to re-examine cryptocurrencies. The Indian government seems to have changed its attitude towards cryptocurrencies, and has done a series of research and follow-up.
It is reported that in September 2019, a new report by the Indian government gave a positive evaluation of cryptocurrencies, arguing that the issuance mechanism of cryptocurrencies has completely changed the global financial technology landscape, but the cryptocurrency bill originally planned to be launched at the end of last year was postponed again.
Supreme Court of India: Responsible for hearing two cases in the field of encryption, one is about the RBI ban, and the other is about the Indian government’s encryption regulatory rules.
Regarding the RBI ban case, it is mainly a confrontation between the "Indian encryption community" and the "Indian central bank". The case has gone through a long trial process since the implementation of the RBI ban (2018.7), and finally achieved a phased result in March this year.
Regarding the case of the Indian government’s encryption regulatory rules, the Supreme Court of India has also gone through several hearings after accepting it in 2018, but it has not yet reached a conclusion.
Belated 'reversal': RBI ban lifted, Indian crypto market recovers
On March 4, 2020, the Supreme Court of India made a judgment on the RBI ban case. The court canceled the RBI’s ban on cryptocurrencies and ruled that the RBI circular on April 6, 2018 was unconstitutional.
Under the several petitions, petitions and complaints of many encryption practitioners and organizations, and the repeated delays and trials of the Supreme Court of India, this legal battle of "encryption industry VS India's central bank" has been on and off, and finally reached a phased conclusion. As a result, the Indian encryption market has also shown signs of rebound and recovery. Global cryptocurrency companies also plan to expand their encryption business to India.
The Indian Crypto Bulls, a local non-profit organization, has also expanded its cryptocurrency roadshow, claiming that it will be the world's largest cryptocurrency awareness campaign, with more than 10,000 participants, including representatives from more than 500 startups .
HashCash, the parent company of cryptocurrency exchange PayBito, has announced plans to invest $10 million in the Indian cryptocurrency industry within 2020.
