Here's What's Happening In India's Uncertain Crypto Landscape

What Happened: After several conflicting reports over the course of the past few months, India may now move to officially classify cryptocurrency as an asset class.

The Securities and Exchange Board of India (SEBI) will oversee regulations for the crypto industry, according to a report from The New Indian Express.

Sources close to the matter revealed that the government has moved away from its “hostile stance towards cryptocurrencies” and will “most likely” classify Bitcoin and other cryptocurrencies as an alternative asset class.

Why It Matters: Along with the classification, a Cryptocurrency Regulation bill is likely to be passed in parliament around September.

“We can definitely say that the new committee which is working on cryptocurrencies is very optimistic on cryptocurrency regulation and legislation... A new draft proposal will soon be in the Cabinet, which will look into the overall scenario and take the best step forward,” said Ketan Surana, Director and chief financial officer, Coinsbit, and Member of the Internet and Mobile Association of India.

The regulation of cryptocurrencies in the country might even be a welcome development to clarify the legal status of trading these digital assets.

Despite no official regulation to prevent crypto trading, Indian banks have cut ties with major crypto exchanges in the country, citing a 2018 circular from the Reserve Bank of India.

The RBI later clarified that these circulars were invalid, but banks remained reluctant to engage with any crypto relates businesses.

"The regulator has been unofficially asking us that why are we dealing in such business when it is ultra speculative. A lot of money flows overseas via this trade which the RBI is not comfortable with as it may lead to money laundering (sic)," a senior executive at one of the banks told Reuters.

"Even though the discussions are informal that is enough. No one wants to go against the regulator," said another source.

Although the regulatory landscape for crypto is still far from being easy to navigate, leading crypto exchanges Kraken, Bitfinex, KuCoin are evaluating an entry into the Indian market to service its 15 million crypto investors.

U.S crypto exchange Coinbase Global Inc COIN even plans to open a physical office in the country and is currently recruiting to “help the Coinbase group develop new ways for our customers to interact with the cryptoeconomy.”