Insider: India crypto ban temporary, until classified as commodity
Regulated digital commodities, not cryptographic currencies
"I don’t think anyone is really thinking of banning it [cryptocurrencies] altogether," said a senior Indian government official to Quartz, reportedly. "The issue here is about regulating the trade and we need to know where the money is coming from. Allowing it as [a] commodity may let us better regulate trade and so that is being looked at.
"Trade is not a criminal offence. Most of us trade in various asset classes in the stock market. So how is this any different? What has to be in place is a mechanism to be sure that the money used is not illegal money, and to track its source is the most important thing."
If it's to be believed, India's so-called cryptocurrency ban will end with some regulatory tightening and re-classification of cryptocurrencies as commodities to be traded as digital assets and clearly distinguished from currency per se.
Is this likely?
This is exactly what all signs have been pointing at for a while. To quote an article from 4 July:
"India's cryptocurrency exchanges might be out of luck for now, but they probably have a role to play in the near future as tightly regulated digital asset platforms."
Others in India have also spoken to Quartz, without anonymity, about their thoughts on cryptocurrencies being tightly classified as commodities, and cryptocurrency exchanges being refocused as digital asset platforms.
"Though cryptocurrencies belong to a new class of financial assets, we can still welcome them as commodities and not currencies because of their high volatile prices," said Shubham Yadav, co-founder of Coindelta, a Pune-based cryptocurrency exchange.
"If these are used to settle transactions, then it acquires the nature of currency. So that is one thing that one needs to be wary of. But if people want to invest in a commodity then that is different, because then we can assume that they are aware of the risks involved," said former RBI (Reserve Bank of India) deputy governor R Gandhi.
There have been a lot of interesting things going on with India and cryptocurrencies, or digital assets as they might be more correctly known in that neck of the woods, for a long time now. In particular, the clear separation between digital assets and digital currencies might mean that a national Indian central bank digital currency might still be on the table.
It may also be worth noting that there's clearly some demand for cryptocurrencies like bitcoin in India, despite the crackdown on exchanges. The week after the now-temporary-looking exchange closure came into effect, the generally quite modest INR:BTC volumes on LocalBitcoins spiked to their highest level since September 2017.
Disclosure: At the time of writing, the author holds ETH, IOTA, ICX, VET, XLM, BTC and XRB.