Indian body urges government not to ban cryptocurrency

• Good governance and regulation of the cryptocurrency ecosystem in India is critical and will give impetus to the Government of India’s Digital India vision, IAMAI said.
• Proposed move to ban will have an adverse impact and will lead to loss in investments and hit 10m Indian crypto customers.
• The government will take a “calibrated” approach to crypto trading and “negotiations and discussions” are going on with the Reserve Bank of India on how to regulate cryptocurrency in India, Finance Minister says.

Internet and Mobile Association of India (IAMAI) on Wednesday urged the Government of India not to ban cryptocurrency and proposed to develop robust mechanisms to regulate the ecosystem.

IAMAI strongly feels that India needs smart, robust and pragmatic crypto regulation, which can lead to the financial revolution and contributes to India’s growth story. 

Given the scale and diversity, the good governance and regulation of the cryptocurrency ecosystem in India is critical and will give impetus to the Government of India’s Digital India vision, the association said.

India is also witnessing a considerable rise in digital assets  and cryptocurrency has been generating jobs across a variety of functions — legal, compliance, tech, marketing, business development, finance, etc. — in India and abroad. 

 “The crypto community consists of over 10 million crypto holders holding over $1 billion worth crypto assets, more than 300 startups generating tens of thousands of jobs and hundreds of millions of dollars in revenue and taxes. There’s a daily trading volume of $350 million-$500 million,” IAMAI said.

“The proposed move to ban will have an adverse impact and will lead to loss in investments and hit 10 million Indian crypto customers. Hence, we are urging the government to define the cryptocurrency regulation framework after due consultation with IAMAI and stakeholders such as India crypto-asset user groups and the exchanges that facilitate buying and selling,” it said.

The Government of India has listed the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 for introduction, consideration and passing in the current session of Parliament.

India plans own digital currency

Under the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, reports indicate that India probably aims to launch its own digital currency i.e. Central Bank Digital Currency (CBDC). This measure will be in line with many central banks which have begun planning to issue their own digital currencies. 

India’s Finance Minister Nirmala Sitharaman’s said that the government will take a “calibrated” approach to crypto trading and “negotiations and discussions” are going on with the Reserve Bank of India (RBI) on how to regulate cryptocurrency in India. 

Members of IAMAI, including India’s leading cryptocurrency players, while welcoming the Finance Minister’s statement, voiced their opinion and apprehensions against the proposed ban on cryptocurrency.

Nishith Desai, Founder of Nishith Desai Associates, said that the US, Japan and other developed countries have a positive outlook towards crypto and are considering setting up of regulations for crypto.

Potential of the digital economy

Moreover, he said that India should develop balanced and positive crypto regulations that will both ensure consumer protection as well as lead to more startups building in blockchain, more jobs, wealth creation for investors, and more tax revenue for the government.

“All types of crypto-asset activity should be encouraged, both government and private. We’re confident that our government will take notice of this technology and its potential to contribute to our $5 trillion economy vision,” he said.

Sumit Gupta, CEO & Co-founder of CoinDCX, remained confident about the outcome and said that India is at a threshold of a fintech breakthrough.

“India already has 560 million online users today. In FY20 alone, India as a country registered over 21 billion digital transactions. The government sees this and understands the potential of the digital economy,” he said.