The new Indian government report has brought forth a ray of hope for crypto holders. The report discusses the regulations of tokens and coins and throws light on how they can help solve several problems.
Crypto Can Help Solve Several Problems
The Steering Committee constituted by Department of Economic Affairs (DEA) under the chairmanship of Subhash Chandra Garg has submitted its final report to the finance minister. The committee in its report mentions that digital tokens can help resolve issues of multiple currencies, allow for micropayments, expedite payment processes, improve liquidity and capital compliance costs.
Per the report,
The mechanisms surrounding cryptocurrencies, particularly the blockchain and initial coin offerings (ICOs), are revolutionizing the global fintech landscape.
Committee Chairman, Subhash Garg said,
“The mandate of the committee was to take stock of developments in the fintech space globally and India, study the regulatory climate in various geographies, identify application areas and use cases in governance and financial services, [and] suggest institutional regulatory upgrades enabling fintech innovations,”
Token Issuance An Efficient Way to Raise Capital
Further, the report delved into how ICOs work and how token issuance is an innovative way of raising capital by businesses. A per the report, 790 ICOs had been issued as of Sept. 25, 2018, raising a total of $20 billion. Also, as per data from token sale tracking website ICO data, the total amount of funds raised globally so far is over $346 million.
Division of Tokens
The Steering Committee report suggests that tokens can be grouped into two categories depending on the objective of their issue. The first category is utility tokens, which “entitle future access to a company’s product or service,”. This type of token includes digital coupons, such as those a hotel or other service providers would issue.
The second category is the security tokens. The report notes that some token issuance has the attribute of security, referencing the U.S. SEC vs. Howey court case which established the guidelines for determining if an offering constitutes security.
Previous IMC Report Receives Flak from Crypto Community
Earlier when the Inter-Ministerial Committee’s (IMC) report was released, the Indian crypto community expressed their displeasure and said that the recommendations were flawed. National Association of Software and Services Companies (NASSCOM) and Internet and Mobile Association of India (IAMAI) also reiterated that banning crypto assets is not the solution. Further, IAMAI also filed a written petition challenging the RBI ban.
Another committee, the Interministerial committee was also constituted on Nov. 2 to study all the aspects of crypto and provide recommendations. Moreover, the IMC met three times before the final submission of the report. Furthermore, the report further lists 31 industry participants. These include the NASSCOM, the IAMAI, Paypal, Mastercard, Facebook, and several banks such as RBL Bank, State Bank of India, and Yes Bank.
Fintech Regulatory Sandbox Framework
Last month, the central bank published its final fintech regulatory sandbox framework. The framework includes the type of businesses, projects, and services that cannot participate in financial activities. These include crypto-asset services; trading, investing, and settling in crypto assets; ICOs; and any products or services which have been banned by the government of India.
The Indian supreme court is scheduled to hear the case relating to India’s crypto policies in January next year. More importantly, the government told the supreme court that it may introduce the bill on cryptocurrency in the next parliament session.
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