Due to a lack of consistent regulatory frameworks surrounding blockchain technology and cryptocurrencies, India, the crypto-sceptic nation with an emerging blockchain development workforce, is in a confusing position.
In early April, the Reserve Bank of India issued a press release prohibiting all banks and regulated financial entities from “facilitating transactions involving cryptocurrencies”. The press release expressed deep concerns over consumer protections and money laundering among others.
The press release, however, did take note of blockchain’s capacity to generate a new state of efficiency and inclusiveness in the financial system; which brings us forward to a recent report from the Law Commission of India that acknowledges cryptocurrencies as a legitimate form of electronic payment.
Gambling and cryptocurrency bans
The July report, titled ‘Legal Framework: Gambling and Sports Betting Including in Cricket in India‘ makes the case that gambling transactions should be made cashless, using means such as debit cards, credit cards, net banking and cryptocurrencies.
As a result of banning gambling, the illegal activities are increasing in the underground market and crimes such as money laundering are on the increase. The report also says that online gambling has worsened since cryptocurrency popularity has risen.
The ban that has catalyzed these issues has prompted what appears to be somewhat of a U-turn on India’s previously harsh restrictions. However, the Indian crypto-community is still waiting with bated breath to see what happens with its domestic cryptocurrency exchanges.
On 11 September 2018, India’s Supreme Court will be giving its final verdict in a hearing regarding the cryptocurrency ban. The date had been pushed back due to the Securities and Exchange Board of India and other organizations failing to submit evidence in time.
Shivam Thakral, CEO of Indian crypto-exchange BuyUcoin, said: “We need to wait for about 50 more days now and every day matters as the Indian cryptocurrency ecosystem is getting affected, so we were hoping for a faster decision.”
These turbulent conflictions are also causing blockchain developers and entrepreneurs to seek greener pastures in other crypto-friendly jurisdictions; due to the nature of the industry, payments and incentives often come in the form of cryptocurrencies, and India has no legal means to convert these tokens into fiat.
A research piece conducted by blockchain community Incrypt surveyed over 100 blockchain developers, finding that “80% of developers will be forced to move abroad and work only on foreign projects”, which is due to the distinct lack of regulatory frameworks in India.
According to hiring solutions provider Belong Technologies, only 5,000 (0.25%) of the 2 million blockchain developers in India have the right blockchain skills. The survey report writes: “The delay in putting together a framework for blockchain is causing India to lose out on jobs, drag in capital infusion, lack of innovation for local problems, talent flight, and setback in global positioning.”
With September set as a final date for clarification on the RBI cryptocurrency stance, the outcome is expected to have a tremendous effect on the future of the Industry in India.
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