The government of India has attracted lawyers from Nishith Desai Associates for consideration of proposals for regulation of cryptocurrency in the country.
Lawyers from Nishith Desai Associates was invited by the Indian government after the firm introduced the document with the proposed regulatory framework for cryptocurrencies in early January. One of the lawyers said specialized media:
"Although from a legal point of view, the government is not obliged to respond to suggestions from the public, the Finance Ministry of India still came out to meet us. At the presentation we explained our proposals for crypto regulation that aroused great interest among the audience".
The document prepared "solely in the interest of society", was presented to the government committee chaired by the Secretary of Economic Affairs, Subhash Chandra Garg. Currently the committee is developing a regulatory framework for cryptocurrencies.
Nishith Desai Associates represents the Internet and Mobile Association of India (IAMAI) in its writ petition in the supreme court against the Reserve Bank of India (RBI) circular which banned banks from providing services to crypto businesses.
The document focuses on regulating the cryptocurrency, not the ban. It argues:
"A complete ban on the use of crypto-assets should not be considered for several reasons. Technologies such as cryptocurrencies and blockchain should be regulation, not prohibition. A complete ban may be counterproductive. A balanced approach to regulation, in turn, will promote the various benefits of technology and reduce risks."
The document describes a number of ways licensing cryptocurrencies:
"This can be done either by the introduction of new legislation or by the imposition of administrative regulations in accordance with applicable law. For example, the introduction of a simple government notification on the use of crypto-assets in the business with the Prevention of Money Laundering Act. Therefore, all cryptocurrency transactions would be carried out in the well-proven AML regime that works on a par with the financial sector and the jewelry industry."
The authors also offer their own classification of cryptocurrencies:
"In General, cryptocurrencies can be divided into three types: payment tokens, security tokens, and utility tokens".
In a interview, lawyer stated that the security tokens will be governed by by the Securities and Exchange Board of India (SEBI) and under the Companies Act. He also said that the trading activity in relation to all the other cryptocurrencies in a regulatory vacuum, while existing laws continue to apply to them. According to the lawyer, the vacuum can be eliminated by the introduction of such regimes as "Know your customer" (KYC), "Anti money laundering" (AML) and "Licensing cryptocurrency assets."