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India considers illegal the use of cryptocurrency (but blockchain is still cool)

It seems that India has no intention of slowing its crusade against cryptocurrencies, but at least it could be open to experimentation with distributed accounting technology.

Following a meeting of the The Council for Stability and Financial Development (FSDC), the government is considering the possibility of developing an appropriate legal framework to prohibit the use of cryptocurrency in India and instead encourage experimentation with distributed registries.

"The FSDC has taken note of developments concerning the strengthening of cyber security in the financial sector, including progress towards the establishment of an IT crisis response team in the financial sector (CERT-Fin) on the basis of a regulatory framework " , reads the meeting notes. "The Board also resolved on the need to identify and secure a critical information infrastructure in the financial sector."

According to a statement, Finance Minister Arun Jaitley and some members of the country's central banking institution, the Reserve Bank of India (RBI), attended the meeting. Curiously, Jaitley previously believed that cryptocurrencies were not "legal" in India; in the same way, the RBI has previously been unreasonably critical of the concept of virtual currencies.

Already in April, the RBI issued a directive that asked all local banks to immediately suspend any relationship with companies oriented to cryptocurrency. Later it became clear that the institution did not even bother to properly search the cryptocurrency field before issuing repeated warnings. It seems that the RBI has subsequently assigned a specific unit for the search for blockchain and cryptocurrency.

These draconian regulatory measures have practically forced the main desks exchanged in India to close the doors. Meanwhile, the Supreme Court is urging the RBI to clarify its position on cryptocurrencies once and for all within the next two weeks.

However, it is worth pointing out that India is also considering some alternatives to the banning of cryptocurrencies, such as the imposition of additional taxes for crypto-assets.

Published October 31, 2018 at 14:07 UTC

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