The Centre needs to quickly finalise its policy on cryptocurrency trading
The delay by the Centre in formulating a policy regarding trading and transactions in cryptocurrencies is leading to a tricky situation for investors in these instruments. Trading in cryptocurrencies such as bitcoin, etherium and litecoin is once again in full swing in various trading platforms in India after the Supreme Court lifted the ban by the Reserve Bank of India (RBI) on financial institutions facilitating cryptocurrency transactions last March. But a recent report in this newspaper indicates that crypto trading platforms and investors have been facing problems with some banks directing payment gateways not to process these transactions. Such indirect curbs on crypto transactions only increase the uncertainty for the entire ecosystem.
The Centre needs to address all these issues in its policy; for a start, it can make the Cryptocurrency and Regulation of Official Digital Currency Bill public. A total ban on trading in these assets will not work as it will result in shifting the trading to overseas exchanges. The Centre needs to frame rules to regulate the trading platform and make sure that they are created and run by credible promoters with adequate networth. The platforms need to implement strong risk management processes including creation of settlement guarantee funds. These cryptocurrencies are however not suitable to act as a medium of exchange and the RBI’s digital currency project must be expedited to meet this demand.