Regulation: Indian Government Introduces Cryptocurrency Bill, Clues on Bakkt Delay from CFTC Chair

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India to Ban Cryptocurrencies and Regulate Official Digital Currencies

The Indian government has served appropriate government agencies and departments with a draft bill on cryptocurrency regulation. This is part of the inter-ministerial consultation process necessary for proposed laws. The bill, if passed into law, will ban cryptocurrencies and provide regulations for official digital currencies.

The Department of Economic Affairs (DEA), Central Board of Indirect Taxes and Customs (CBIC), Central Board of Direct Taxes (CBDT) and the Investor Education and Protection Fund Authority (IEPFA) are some of the agencies in support of the the “Banning of Cryptocurrencies and Regulation of Official Digital Currencies Bill 2019″ draft. According to the Economic Times, these agencies support the idea that India has been slow to regulate the cryptocurrency industry. The Ministry of Corporate Affairs, for instance, believes that most crypto projects are Ponzi schemes aimed at defrauding investors.

If it receives positive feedback from the various agencies and departments, the bill is expected to be recommended to the next government after the May 2019 elections .

CFTC Chairman Gives Clues on Bakkt Bitcoin Futures Delay

Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange, indefinitely postponed Bakkt in December 2018. In a recent interview with Coindesk, Christopher Giancarlo, the Chairman of the Commodities Futures Commission (CFTC), may have hinted at the reasons for the delay of the Bakkt Bitcoin Futures Exchange.

Giancarlo spoke generally about cryptocurrency regulation in a manner that suggests that there are issues with how the clearing of trades and custody will be handled on the proposed futures platform. He mentioned that the Commodities Exchange Act of 1936 permits the CFTC to have oversight over physically settled cryptocurrencies. He then added that the law “contemplates an entity using a regulated trust or bank for custody of customer funds unless they opt to hold the assets in the clearinghouse.”

It can be deduced that Bakkt is yet to be approved because the law does not permit ICE to be a custodian. ICE is neither a regulated trust or bank. Additionally, ICE does not operate its own clearing house but plans to use ICE Clear US for this purpose.

The CFTC Chairman also touched on how asset class participants in the clearing house may not “want the exposure to mutualize their risk on their interest rate or commodity futures with somebody else’s cryptocurrency holdings.”

Since Bakkt plans to use the ICE Clear US clearing house, the reaction of clearing members to cryptocurrency holdings on ICE Clear may also be an issue.

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