India on Blockchain: Future Regulation after the Newly Elected Government
India is the largest democracy in the World. The central elections recently concluded yesterday, on the May 23rd, 2019, whereby the current ruling party won the elections again as the people of the nation chose Narendra Modi as their Prime Minister for the second time.
Ever since the Indian elections began on April 11th, 2019, the nation has been under ‘Aachar Sanhita’ or code of conduct, according to which the Government can pass no new law. Now that the elections have ended and the results have been announced, subsequent regulatory changes within the blockchain and the cryptocurrency space can also be expected to be made.
Pre-election Indian trader suicide
A few days before the election results were revealed, a Bitcoin trader from India took his own life after being threatened by senior police concerning losses he incurred while trading crypto assets on their behalf. In his suicide note, he explicitly states:
“DySP [Deputy Superintendent] Chirag Savani had come to my house to invest in five bitcoins. After incurring a loss due to slide in their value, Chirag and his brother Montu [Harnish] were demanding 11.575 Bitcoin. I am distraught due to the recovery they are claiming. My life is not worth living. DySP Chirag Savani came to my house and threatened me to return the amount they had invested. I have been forced to commit suicide. The two brothers (Chirag and Harnish Savani) are responsible for my act.”
Authorities are still investigating this incident, but it points out to the vital truth that the outright ban of crypto trading across India has its detrimental effects through black market trading incidents such as this.
Winning Party’s Blockchain Agenda
According to the ruling BJP party’s declaration, it recognizes blockchain technology as a tool to be potentially used for development specifically in small businesses and agriculture. It states:
“Machine Learning, Blockchain technology, Big Data analytics, etc. for more predictive and pro table precision agriculture. They will expose MSMEs to Artificial Intelligence, Robotics, Internet of Things, Virtual Reality, BlockChain technology, Etc. The report of the Committee is in the finalization stage, hence, prohibited under section 8(3) of RTI Act, 2005,”
Furthermore, even with the ongoing cryptocurrency trading ban in place, the Department of Economic Affairs in India mentioned in January 2019 that cryptocurrency regulations are in its final stages of formulation. This would be a massive step in the positive direction for the nation’s advancement in the blockchain sector, where it lags considerably behind other Asian counterparts like Hong Kong and South Korea.
Yet, India has recently been in the limelight for its Ponzi schemes and scam projects posing as ICOs and legitimate blockchain use-cases along with money laundering and tax evasion cases. As Evan Luthra, an entrepreneur, and blockchain expert explains about the current scenario of cryptocurrencies in India,
“While we see a lot of progress happening in India and multiple state governments pressing forward with blockchain and blockchain based solutions, India has also been the leader when it comes to scam projects.”
It is quite evident that a total ban on the trading of cryptocurrencies would retard not only the growth of the blockchain industry but also that of supporting industries like Fintech and Venture Capital. For example, Facebook is reportedly aiming to initiate its cryptocurrency project in India with Whatsapp. Their project Libra is also reportedly in its last phase of testing and development. Thus, the possibilities are limitless with the industry and it is in the interest of governments to foster their growth through well-defined regulatory stances.
Finally, there is still a glimmer of hope for a better future for cryptocurrency regulations within India. The ban imposed by the Indian Central Bank after July 5th, 2018 was put to contest before the Federal Courts. The decision to strategically regulate cryptocurrencies and blockchain development in India could hence have the potential to rapidly expand its potential through increased funds and expertise into research and development.