India unlikely to enforce outright ban on crypto trade

India appears to be backing down from an outright ban on cryptocurrency trade and will instead treat digital coins as commodities according to Indian technology magazine Quartz.

Citing a senior government source who wished to remain anonymous, Quartz reported India’s finance ministry has set up a research panel to study the behaviour of cryptocurrencies to see if they act like commodities.

Regulating trade

The source was quoted as saying: “I don’t think anyone is really thinking of banning it (cryptocurrencies) altogether.

“The issue here is about regulating the trade and we need to know where the money is coming from. Allowing it as (a) commodity may let us better regulate trade and so that is being looked at.”

India’s primary response to cryptocurrency trade has been to stamp out illegal activities such as money laundering and the funding of terrorism.

Bank ban

To this end, the country’s central bank has already banned financial institutions from dealing with cryptocurrency exchanges – making it impossible for the exchanges’ clients to withdraw capital from their accounts in fiat currency and, therefore, making it more difficult to use cryptocurrency to launder illicit funds.

The research panel, however, believes that such criminal activity should not be a barrier for legitimate trade.

The official quoted by Quartz said: “Trade is not a criminal offence. Most of us trade in various asset classes in the stock market. So how is 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.”