Hyderabad: With the Centre taking note of the rising investor interest in cryptocurrency and likely to introduce the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, the fate of nearly seven million cryptocurrency owners in India hangs in balance.
The proposed Bill could halt the juggernaut of cryptocurrency, which had gained traction in 2020, in India, fear industry experts. This especially as Union minister of state for finance and corporate affairs Anurag Thakur has already said the government will explore usage of Blockchain technology for ushering in a digital economy but reiterated government’s stance that it does not consider cryptocurrency as legal tender and will take measures to eliminate use of crypto-assets in financing illegitimate activities.
Kunal Pande, partner, KPMG India, said many countries have allowed use of cryptocurrencies while setting up mechanisms to monitor them. “The proposed Bill is a step towards ushering in a regulatory framework. However, it would be important to understand how the model proposed in the Bill coexists with other models being used across the world in this highly interconnected digital global economy,” he added.
He said variety of approaches have been taken by countries in realm of cryptocurrencies such as stablecoin, which are backed by assets and reduce volatility. “India can learn from these countries and consider allowing other models like asset-backed cryptocurrencies, decentralized cryptocurrencies with safeguards rather than banning it completely as it may lead to migration of Indian cryptocurrency users to such setups in other countries,” he added.
Sumit Gupta, CEO and co-founder of one of the largest cryptocurrency exchanges in India, CoinDCX, said globally, cryptocurrencies such as Bitcoin are considered a public cryptocurrency, owing to their public nature whereby participants can verify transactions in transparently. “Since the essence of cryptocurrency is to move towards a decentralized financial ecosystem, meaning no individual or organization can control it, banning them is practically impossible,” he said. He added RBI has indicated it may be exploring coming out with India’s own CBDC (Central Bank Digital Currency), like other countries, such as UK, Canada, Japan, Singapore, Hong Kong which are already at an advanced level of development while they explore possibility of use cases such as cross border payment option.
Rahul Pagidipati, CEO, ZebPay, said, “We think a ban is unlikely, but if it happens, we’ll do everything within the law to help our members manage their funds. Wealthy crypto owners probably will move their crypto to a foreign account or cold storage wallet. Regular folks may not be able to do.” He pointed out that they would actively pursue dialogue with the government to persuade them to replace any ban with positive regulation.
Mukul Shrivastava, partner forensic & integrity services, EY India, said banning cryptocurrency may not be a good idea. It is important to look at aspects like robust KYC norms, traceability or taxation with regards to cryptocurrency to boost confidence of users. He said in India, where many vulnerable citizens fall for fraudulent emails or calls, perils of cryptocurrency are high and adequate safeguards are important.