The Indian government official who headed the committee which drafted the bill to ban cryptocurrencies has resigned after releasing the report and draft bill which the crypto community calls “flawed.” Meanwhile, the government has confirmed that cryptocurrency is currently not prohibited in the country and the recommendations are being examined by relevant authorities.
Also read: G20 Leaders Issue Declaration on Crypto Assets – A Look at Their Commitments
Crypto Recommendations Heavily Criticized
India’s cryptocurrency bill has been drafted by an interministerial committee headed by former Department of Economic Affairs (DEA) Secretary Subhash Chandra Garg. The committee began working on crypto recommendations since November 2017 and finally submitted its report with a draft bill to the Ministry of Finance on July 22. After both the report and the bill were made public, Garg tweeted that his “Committee is very receptive and supportive of distributed ledger technologies [DLTs] … [but] Private cryptocurrencies are of no real value. Rightly banned.”
His tweet did not fare well within the Indian crypto community, as comments soon flooded his account in response. Some criticized his definition of private cryptocurrencies. “Sir, BTC is not private, it’s more transparent than your INR,” a comment reads. Others pointed out that crypto is the future in advanced countries and banning it would cost India jobs, investments, talent, and more.
The community was also quick to point out that cryptocurrency is not banned in India despite Garg’s tone which could be misconstrued otherwise. A number of people contested the committee’s finding that “There is no underlying intrinsic value of these private cryptocurrencies,” with some arguing that embracing DLT while banning cryptocurrency is ludicrous. News.Bitcoin.com recently reported on the content of this bill including crypto-related prohibitions and offenses.
Garg Unexpectedly Resigns
On July 24, Indian Prime Minister Narendra Modi reshuffled his top-level bureaucrats and appointed Department of Investments and Public Asset Management Secretary Atanu Chakraborty as the new DEA Secretary. Garg has been appointed Secretary of Ministry of Power, primarily responsible for the development of electrical infrastructure across the country. According to local media, he is unhappy with the shift and has subsequently resigned. He made a final tweet from his DEA Secretary Twitter account on July 25, confirming his new appointment and resignation.
Garg’s replacement has given Indians some hope as they see a possibility that the new DEA Secretary could take a more positive approach to cryptocurrency.
“Good riddance! for not understanding basic crypto uses and biased report written to [the] government. I hope the next person in office after you is educated enough,” one Twitter user commented. Many others shared this sentiment in their own comments. “With cryptos, you proved your inability to grasp new technology and its adoption,” another declared.
Some went as far as accusing Garg of ruining people’s livelihood and fleeing when the situation got out of control as people became upset. “You should be jailed or [an] investigation should be launched against you for the deterioration of the Indian economy,” according to one user. Another wrote:
[The] Entire crypto community in India is happy to know that you are quitting.
Nearly all the responses to Garg’s final tweet as the DEA Secretary are about crypto, with some people still asking him to change his mind about banning it before he leaves and ensuring its regulation.
Crypto Currently Not Banned in India
The Indian government has recently confirmed that cryptocurrency is currently not banned in India. Shri Anurag Singh Thakur, Minister of State in the Ministry of Finance, told Rajya Sabha, the upper house of India’s parliament, on July 16 that the government has not prohibited cryptocurrency in the country.
According to the Ministry of Finance:
This [Garg’s committee] report and draft bill will now be examined in consultation with all the concerned departments and regulatory authorities before the government takes a final decision.
“After this, if the government decides to go ahead with the ban, this bill will be presented in parliament for debate, and vote. If it’s approved by the majority, it will be sent to the President for his approval as per Article 111,” explained Nischal Shetty, CEO of local crypto exchange Wazirx. “Only after his assent, can a bill become an Act of Parliament.” He further cited one of the recommendations in the report, stating that “It is also possible that the government may establish a standing committee to revisit the issues addressed in the report as and when required.”
Bill and Report Dated Feb. 28
Even though the interministerial committee report (IMC) was made public on July 22, it is dated Feb. 28, which some criticize as being too outdated given recent major developments such as the G20 summit and the release of new crypto standards by the Financial Action Task Force (FATF). The FATF guidance was released on June 21. India, along with other G20 nations, has reaffirmed its commitment to applying these standards.
Sumit Gupta, CEO of local exchange Coindcx, shared his thoughts with news.Bitcoin.com, stating that “The report cracks fundamentally at places, there were few flaws pointed out in its understanding of DLT/cryptocurrencies and seems dated (5 months old).”
The Indian supreme court is expected to address the IMC report in the upcoming hearing of writ petitions against the banking restriction by the central bank. Gupta believes that “This document, which is framed prior to India’s commitment to FATF recommendations, shouldn’t be set as the benchmark for the supreme court hearing,” adding that “Hopefully, the court asks the DEA to review it again and make a fresh recommendation in view of the major global developments since then.”
Shetty further asserted:
The report has completely ignored the FATF guidelines which clearly states that crypto is not a threat to the global economy, and can be regulated properly.
Flawed Crypto Report
The Wazirx CEO believes that everything is wrong with the committee’s report. “It’s unfair to allow a committee made up of non-technologists to make a decision on an innovative technology still in the nascent stage. It’s shocking to think that people from the industry were never consulted before preparing the report,” he opined.
Even the classification of cryptocurrency is flawed, he detailed, adding that the committee recommends a ban on the use of crypto as legal tender or currency without mentioning other possible classifications such as asset, utility, or securities. “It shows that they don’t have enough understanding of crypto,” he remarked.
Before publishing the report, the committee claims to have studied how a number of countries treat cryptocurrency. However, Shetty pointed out some inaccuracies. For example, “The report also incorrectly mentions that crypto is banned in China, but in reality, holding crypto is not banned,” he clarified, noting that “recently, bitcoin was legally recognized by a Chinese court, whereby it was concluded that it should now be considered as digital property.” The CEO continued:
I hope that the Indian government will keep an open mind, and not take such a regressive decision that will push us decades behind. IMC’s report is flawed, and lacks a fundamental understanding of cryptocurrencies.
“The report exhibits that there was no clear consensus in the committee on banning. Interestingly, the committee also understands that considering the nature of technology, banning might not be effective,” Gupta further shared with news.Bitcoin.com. “As DLT is a fast-evolving technology, it’s recommended that standing committee should discuss some of these points openly and more frequently with industry experts outside the government and come up with the right ways to regulate the industry effectively rather than outrightly banning it. The solution is to educate, regulate and allowing people to innovate.”
Meanwhile, there are several ways the community can help the Indian government understand crypto. News.Bitcoin.com previously reported on some ideas for the community to help. Shetty urges all Indians to “Write physical letters to your local MPs, our finance minister, and prime minister explaining why this IMC report is flawed.”
Do you think Garg’s resignation is related to his crypto recommendations? Do you think the Indian government will adopt the bill by Garg’s committee as is? Let us know in the comments section below.
Images courtesy of Shutterstock and the Indian government.
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