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Crypto Now Legal In India? Not So Fast

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Blockchain advocates have hailed the recent Indian Supreme Court’s pro-crypto ruling as a landmark for adoption and development. Now, new forces are emerging that seek to put the brakes on India’s rapid embrace of cryptocurrency. 


COURT RULING DOES NOT FULLY RESOLVE THE ISSUE

The Economic Times of India has published an article outlining the details behind the court ruling, which overturned a Reserve Bank of India (RBI) circular prohibiting banks from dealing with crypto exchanges. The author points out that the court did not expressly endorse cryptocurrency. Rather, it concluded that the RBI overstepped its authority, as there is no explicit law against crypto activity. Thus, should the government pass such a law, crypto could once again be restricted.

It is just such a law that the Times now calls for. Specifically, the Times advocates for a law that bans banks from dealing with cryptocurrency for five years. Thus, although some may consider this matter closed, the legal status of cryptocurrency in India remains far from settled. Late last year a draft bill was introduced in the Parliament that would have completely banned blockchain assets, yet it died early. Similar bills will almost certainly come up again.

Now that India’s highest court has opened the door to crypto use, the crypto industry will need to make its case to the nation’s lawmakers. Given the hostility lawmakers around the globe tend to have toward this new asset class, the task will not be easy.

CRYPTO MUST BE ADDRESSED BY REGULATORS

India is only one example of nations around the world that are struggling to develop proper guidelines for blockchain assets. Global leaders are finding it increasingly difficult to ignore crypto adoption, and are now realizing that if they remain silent the courts will step in.

Although there is no shortage of disdain for cryptocurrency among lawmakers, banning it will be next to impossible. In fact, anti-crypto laws are likely to not only experience hostility from courts, but also from the  legacy financial space. This sector has now come to recognize its remarkable potential, and are slowly embracing it. In India, for example, the RBI ban earned the ire of banks because it also prohibited them from using blockchain for cross border fiat transfers.

Thus, as the blockchain revolution moves forward, regulators will have no choice but to accept the legitimacy of cryptocurrency as an asset class. Attempting to block its use through legislation will ultimately fail, and likely set back any nation that chooses this path.

Do you think crypto will ever be legal in India? Add your thoughts below!


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Regulation

New York authorizes first Yen stablecoin operator in the US

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New York has given the first authorization to a stablecoin backed by the Japanese Yen to operate in the U.S.

Per a Dec. 29 announcement, the New York Department of Financial Services has granted Japanese firm GMO-Z.com a charter to handle U.S.D. and Yen-backed stablecoins in New York. 

Given New York’s status as a global center, the NYDFS is the most prominent state financial regulator in the U.S. It is also one of the most aggressive. A pass to operate in New York often opens up the rest of the country. 

GMO’s charter is as a limited liability trust company rather than a full bank, the principle difference being in authorization to handle deposits. While a stablecoin operator typically needs the ability to hold reserves of the pegged asset, GMO’s charter limits its rights to hold other kinds of deposits not central to its ability “to issue, administer, and redeem” its stablecoins. 

The right to issue such non-depository charters has been a bone of contention between state regulators like the NYDFS and national banking regulators in the U.S. 

GMO president and CEO Ken Nakamura said: “We’re breaking ground with our move to issue the first regulated JPY-pegged stablecoin, which many see as a safe haven asset.” 

The NYDFS recently made changes to its famous BitLicense, including a conditional format that buddies up newly licensed firms with existing licensees. The first conditional BitLicense went to PayPal, facilitating the launch of its new crypto services earlier this fall with the help of longstanding licensee Paxos.