Smart crypto policies can hold India’s tech dominion in place
Experts are pretty confident that the Indian government will most likely choose to regulate the thriving crypto economy instead of banning it.
There is no denying that the Indian government has a controversial relationship with cryptocurrencies, as recently revealed when the government announced it would ban all private cryptocurrencies – a list that will likely include every digital asset on the market today – according to previously all of these restrictions lifted in 2019.
To better explain, it is expected that when the government meets again for the winter session, it will discuss cryptocurrencies and regulations of the Official Digital Currency Act 2021, as the name suggests, is trying to create a regulatory framework within which all private cryptocurrencies will be banned could.
Even so, there is still a lot of confusion about what the term private cryptocurrency is, with some speculating that it could simply be security-focused tokens like Monero (XMR) or ZCash (ZEC). On the flip side, Naimish Sanghvi, founder of crypto news website Coin Crunch India, believes the Indian government’s definition of private property could be extended to pretty much any cryptocurrency on the market.
“The 2019 report by the Ministry of Economic Affairs on cryptocurrencies basically states that anything that is not sovereign is referred to as private cryptocurrency. And according to this logic, that means that Bitcoin and Ethereum flow into this definition. ”
The road is very blurry
Nischal Shetty, CEO of Indian crypto exchange WazirX, told Cointelegraph that it is difficult to understand what the government means for private cryptocurrencies, especially since prominent assets like Bitcoin (BTC) and Ether (ETH) are essentially public cryptocurrencies that are based on Build blockchain infrastructure transparency – each project has its own specific use cases.
Shetty went on to stress that people cannot use Indian rupees or tether (USDT) to pay fees on the bitcoin or ether blockchain. Instead, they need cryptocurrency to use decentralized applications (DApps) and create unusable tokens (NFTs). He says:
“While the description of the bill may seem like January 2021, several notable events have occurred since January. First the Standing Committee of the National Assembly held a public consultation, and then our Prime Minister personally requested crypto regulation in India.”
Sumit Gupta, CEO of the CoinDCX cryptocurrency exchange, told Cointelegraph that there is no official label for private cryptocurrencies anywhere else in the world – and so the public was eagerly awaiting the Indian government’s definition of private property for the time being.
He also indicated that it is best not to speculate on what it could possibly be, as full details of the bill are not yet in place. However, it is clear that the government is realizing the transformative potential of the blockchain and is paying more attention to its various uses and uses in our daily lives. Gupta Notes:
“A total ban is unlikely as it would call into question India’s ability to use blockchain technology to transform our industry – an outcome that we believe politics will avoid politics. Cryptocurrencies are a powerful trend shaping economies around the world, and we remain confident that our policy makers will enact regulations that will help our economies reap the rewards of the global cryptocurrency industry. ”
Is a blanket ban on the horizon?
When asked about the possibility of an outright ban that could nourish his ugly head again, Shetty said it would be best to wait and learn more about the law. He admitted that he was optimistic about India’s overall outlook for cryptocurrencies, citing recent comments from Treasury Secretary Nirmala Setharaman, in which she stated that India may just be trying to “do the right thing”. all resulting innovations.
Alluding to the Comprehensive Financial Action Task Force (FATF) guidelines proposed at this year’s G20 summit, Shetty added:
“A blanket ban would also lead to an increase in OTC markets, fake exchanges and brain drain from India. Today’s cryptocurrency industry directly / indirectly employs 50,000 people and generates millions in tax revenue for the government. The crypto industry is open to regulation, but an overarching ban will damage the country’s entire financial and technological ecosystem. “
Likewise, Gupta welcomes any bill as it ensures that policymakers begin to recognize the importance of this new asset class as well as the growing appetites of retail and institutional investors in India. He added, “While we are not speculating on the full details of the bill, we are confident that the government will do its best to position our economy for inclusive growth.
In his view, it is ideal to maintain a balanced approach between innovation and regulation, with the government clearly defining the specific parameters that are important when dealing with cryptocurrencies, without being overdue.
Regulation, not an absolute ban
Recent reports from local Indian media claim that an outright ban may have no effect. Instead, the government could put in place a well-designed governance framework for how digital assets are regulated in the region.
News media organization NDTV announced that it had received “cabinet notes” regarding the proposed cryptocurrency bill. According to the document, only proposals to regulate cryptocurrencies as assets will be regulated by the Securities and Exchange Commission of India (SEBI), rather than banning them outright. In addition, the notice is intended to indicate that investors will have a certain amount of time to declare their crypto holdings and store them on SEBI-regulated platforms – a move that suggests that individual wallet operators may be operating in the region could be banned altogether.
Finally, the document suggests that the upcoming crypto law will not allow digital assets to be recognized as legal tender. However, the government might consider creating its own central bank digital currency somewhere.
Policy making and India’s digital dominance
India currently has a dynamic technology and innovation sector that is home to the third largest startup ecosystem in the world. In that regard, Gupta noted that investor confidence in the country has only continued to grow recently, with Indian crypto firms amassing more than $ 500 million worth of investments for the full year 2021 alone.
In addition, FDI in this sector is expected to grow to over $ 25 billion by 2025 and potentially exceed $ 200 billion by 2030. In this regard, he added:
“Only recently, Singapore’s crypto exchange Coinstore entered the Indian market despite regulatory uncertainty and shows that India’s strength as a crypto hub continues to attract investors.” International company. If a comprehensive ban goes into effect, it will not only affect the access and adoption of digital finance for consumers, but also limit innovation and technological advancement for the economy.
India has always been known as a technology center and can improve its economic and technological status as a world power by tackling the future of finance. Hence, it will be interesting to see how the country decides to regulate the burgeoning digital asset market.