The National Payments Corporation of India (NPCI) refused to block crypto trades in India giving a sense of relief to Crypto investors. The decision to ban crypto trade have been left upon banks’ risk and compliance team. So, the onus is on the banks to decide whether to ban transactions of cryptocurrency trades. The NPCI passed these orders when several banks are blocking the payments for cryptocurrency deals, fearing the possibility that government could order a complete ban on the trade of digital coins.
Banks have also started taking down on some cryptocurrency exchanges and investments in India. According to a report, approximately half a dozen banks have directed the payment gateway operators to blacklist merchants involved in the trade of cryptocurrencies. Further, these banks restrained the users from using online fund transfer methods to trade cryptocurrencies. So, the users of such banks cannot use UPI, net banking, or cards.
NPCI refused to take a central decision to disable use of UPI and RuPay cards as payment modes for crypto trades and investments. But if any such move was taken, it would have been applied uniformly to all banks, and investors would have a fistful of investment options such as MasterCard, Visa, PayPal. The crypto trade won’t stop as some of the banks have not restricted it yet. However, uncertainty looms about how long those banks will allow crypto trades. The lawmakers are discussing granting investors an exit window of 3-6 months before completely banning the trading and issuing of cryptocurrencies in India.
It is seen that traders are shifting to the banks which allow crypto trades and investments or they use less efficient fund transfer options such as IMPS, RTGS, or NEFT. Selling decentralized currency to overseas buyers under peer-to-peer deals is possible but it would fetch lower prices and add to currency conversion cost.
The orders of NPCI are based upon the Supreme Court’s decision. Supreme Court in March 2020, overruled the cryptocurrency ban in India that was imposed by the Reserve Bank of India (RBI) in 2018. The NCPI has not blocked any crypto trades and RBI has not published any directives after Supreme Court’s statement.
IndiaTech is an industrial body working with startups and their investors. It wrote to the government and suggested that cryptocurrencies should be regulated and their transparent use should be encouraged as an asset, also it should highlight its potential in boosting India’s economy.
The suggestions include cryptocurrency as an option for investment and not as a currency, the way it has been used in some other countries.
“Crypto has a bright future in India. It is the sector that is inevitably at a unique stage to attract FDI, generate employment at the same time foster innovation which puts India on a global map. There is potential that needs to be rightfully tapped for India to see several startups grow out of this sector,” IndiaTech’s proposal said.
It further said, “There are associated risks as with any other financial instrument or asset which can be addressed with policies and regulations that do not stifle the underlying innovation that these emerging technologies are built upon. India needs to embrace crypto and create an enabling regulatory environment for the sector to take off the way it is meant to in a transparent manner.”
The value of crypto assets crossed $2 trillion globally last year, and Bitcoin is valued at over $900 billion.
In May 2020, The Supreme Court of India gave uplifted India in terms of cryptocurrency by scarping the cryptocurrency ban in India imposed by Reserve Bank of India (RBI) in 2018. Cryptocurrency in India then opened new doors for Indian investors.
Cryptocurrency is a concept that works as a medium of exchange for purchasing goods and services online. The working of cryptocurrency uses cryptography. For each cryptocurrency, a Distributed Ledger Technology (DLT) is used which keeps the database of every transaction. The database stores information on their transparent financial transactions made through cryptocurrency.
In March 2020 the Supreme Court RBI lifted the ban imposed by RBI and trading in cryptocurrency has been made legal since then. With this lifting of the ban, trading was possible in cryptocurrency with the precautions.
Mentioning the lifting of the ban, NASSCOM tweeted, “We welcome the Supreme Court’s decision to lift RBI’s ban on trading in cryptocurrency. We believe that banning tech is not the solution, and a risk-based framework must be developed to regulate and monitor cryptocurrencies and tokens”.
DISCLAIMER: This article reflects author’s view point. Goa Chronicle may or may not subscribe to views of the author