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The Year 2018 in Review: Crypto Highs and Lows in India

December 31, 2018 13:04
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2018 was an interesting year for cryptocurrencies. So we at Crypto-News India decided to pen down all the interesting developments that took place in the course of this highly productive year.

Till January, the Indian government had an extremely laissez faire outlook to cryptocurrencies and trading as a whole, despite the monumental bull run that was going on. However, come February, the ball rolled into motion when during the Union Budget speech, Finance Minister Arun Jaitley said his now famous line, “Distributed Ledger System on the Blockchain technology allows organisation of any change of records or transactions without the need of any internmediateries. The Government does not consider Cryptocurrencies as Legal Tender or Coin and will take all measures to eliminate the use of these Crypto Assets in Financing Illegitimate Activities or a Part of the Payment System. The Government will explore use of Blockchain technology proactively for assuring in Digital Economy.”

The biggest misconception of the year, thus started, when mainstream media reported that cryptocurrencies were illegal. But we were one of the few news portals that read between the lines and reported that what the Finance Minister had said was actually the opposite: Cryptocurrencies were not illegal. 

Post that, the Reserve Bank of India, the central body, said banks under the central bank in India would have to stop working with cryptocurrency exchanges in the space of three months which effectively stopped the deposits and withdrawals of fiat currency. However, luckily entrepreneurs are innovative enough to look for loopholes and a lot of new exchanges came up which allowed traders to trade with minimal interference from banks. Methods such as Unified Payment Interface (UPI), National Electronic Funds Transfer (NEFT) and Immediate Payment Service (IMPS) became the new normal.

The RBI had also stated that it would constitute a unit to study cryptocurrencies and blockchain technology.

Apart from that, a handful of cryptocurrency exchanges, individual petitioners, interested stakeholders in the community also filed a petition against the RBI in the Delhi High Court as well as the Supreme Court to revoke the ‘ban’ saying it was unconstitutional. At the time, a cryptocurrency exchange CoinRecoil had said, “The move by the RBI has put the burgeoning crypto currency sector in jeopardy and may affect the basic rights of such entities to carry on any trade. The circular appears to be arbitrary and unconstitutional since it does not give strong facts as to why RBI is against the business of cryptocurrencies. A logical and well thought arguments backed by solid facts are the primary requirements under the Constitution to put a stop to any business in India.”

Taking it forward, the RBI requested the apex court to shift all cases pertaining to this matter under itself. Then the Supreme Court directed all participants in the cryptocurrency matter to file petitions with, only the apex court.

While, the RBI was arguing cases in the court stating why their decision made perfect sense, many people and publications also filed Right to Information (RTI) applications asking the central bank where it stood on the cryptocurrency research unit that it had said it would form. However, the RTIs presented a sobering reality.

In September, news portal CoinCrunch said, “There is no new unit created formally in RBI for the purpose mentioned in RTI query. Therefore there is no information to furnish in the matter.”

Apart from RBI, the Finance Ministry had also announced that it had created a unit to study cryptocurrencies and the blockchain technology and it was slated to have been headed by the Secretary of Department of Economic Affairs, Dr. Subhash Chandra Garg.

In the ongoing court case, between the Union of India and cryptocurrency exchanges, this committee has been pulled up by the Supreme Court and asked for its views on what progress it had made on the regulation of cryptocurrencies.

In the midst of this never-ending court battle, exchanges found it too hard to keep operations running as well as to pay out the lawyers fighting cases on their behalf. Zebpay, one of the oldest exchanges in the country shocked the community when it announced that it was shutting shop.

Ajeet Khurana, the Chief Executive Officer (CEO) of Zebpay had told Crypto-News India, “The Indian environment is highly non-conducive to the crypto business. Our revenue model is only through transaction fees. So by shutting the exchange, we have effectively made our revenue zero. Naturally no company would want to do that if it has a choice.”

When asked about speculations on him being in the know of things Khurana had said, “That is silly. Just think for a moment who we are dealing with: It is the Supreme Court of India. I have full faith in them and that they will take the right decision for India. But there is no way anyone can be sure about the outcome of the hearing that we are part of.”

Not just that, but the authorities also tried to make an example when police in Bangalore arrested cryptocurrency exchange Unocoin’s founders, Sathvik Vishwanath and SV Harish for installing a cryptocurrency kiosk in a city mall. The police said that it was done in violation of ATM regulations but, as the real picture emerged, it turned out that the police had it all wrong.

Swaroop Anand, the lawyer representing Unocoin had said, “The matter is hitherto sub judice and hence, it is best if we refrain from commenting further. There has been some misunderstanding, as crypto-currencies are not the legal tender but it is still not illegal to transact in the same. We have always persevered to spread the right information and educate our users on the risks involved. Our faith in the legal proceedings still stands and we are willing to cooperate with the authorities.”

While a local court had asked the police to present Vishwanath and Harish, the police were unable to pin any charges on them, due to ambiguity surrounding regulations and the duo was released.

In the last court hearing, the Ministry of Finance had said that it had apprised the SC only about details of internal meetings but not the “..estimated time within which the Government will ultimately come out with its policy decision..”

With this latest statement, it would not be overtly harsh to say that the government has dragged its foot on this issue for an inordinate amount of time. When the formation of the committee was announced during the February Budget Speech, it was stated that the regulations would be ready by July 2018. In July, the community was told that the regulations would be ready by December. However, as December nears to an end, it is amply clear that the draft on regulations are nowhere in sight but the government continues to dangle that piece of carrot by throwing little pieces in the community’s direction.

However, on a slightly cheerful note, recently the committee had said, “We have already had two meetings. There is a general consensus that cryptocurrency cannot be dismissed as completely illegal. It needs to be legalised with strong riders. Deliberations are on. We will have more clarity soon.”

Given that election is just around the corner, it will be awhile before the cryptocurrency community has a clear answer.

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