India continues to shun cryptocurrency

BTC and other cryptocurrencies is still shunned in India, and the country’s central bank is showing no sign that it will budge from its stance anytime soon.

On Monday, Reserve Bank of India (RBI) Executive Director Ganesh Kumar told the audience at a Mumbai conference that the central bank “will not be using it [BTC] for any payments and settlements… though the technology underlying cryptocurrencies will not end.”

RBI is infamous for continuously rejecting calls from the growing local bitcoin industry to recognize and license BTC trading in the country, telling traders that “dealing with virtual currencies will be doing so at their own risk.” Under the Payments and Settlement Systems Act of 2007, the central bank has the power to regulate the digital payments industry in India.

For months now, the government has been reportedly deliberating on whether to create a regulatory framework for cryptocurrencies. That agenda, however, was overshadowed by a disagreement between the central and the Securities and Exchange Board of India (SEBI) over which body should regulate the cryptocurrencies.

RBI considers BTC as security rather than currency, which means that it should regulated by SEBI. The central bank also proposed that the digital currency be traded as commodity derivatives, just like gold or silver, but the securities board rejected the proposal on grounds that BTC “cannot be classified as commodity derivatives as per extant legal provision.”

Domestic digital currency exchanges Zebpay, Unocoin, Coinsecure and Searchtrade founded a self-regulatory watchdog, the Digital Asset and Blockchain Foundation of India (DABFI), this year to lobby the Indian government to be lenient on digital currency. The group is currently working with lawmakers to define a set of guidelines for cryptocurrency use and trading in the country.

“We will do our best to continue with our efforts to educate the government about cryptocurrencies,” said Zebpay co-founder Sandeep Goenka, according to Quartz. “It can be useful for India by turning the country into a fintech hub, to increase financial inclusion, and there are several other benefits of it.”