The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 – a bill that contemplates a ban on crypto assets in India – is among the list of bills to be presented in this Parliament session. It talks about two things: first, initiating laws to make it easy for the Reserve Bank of India (RBI) to create its own CBDC, and second, banning ‘private crypto assets’ with some exceptions. We’ve reached a crucial stage as we wait for the bill to be presented in the Parliament. Crypto is the financial internet of the future, and global decentralized apps would be built on blockchains like Bitcoin and Ethereum. Over 1 crore Indians are already saving, earning, and investing in this thriving global crypto economy. Banning it would be like banning the Internet in the 1990s and will set India back by years while the rest of the world moves forward.
Impact of the bill
Covid-19 has had a devastating impact on our economy leaving the majority of once-thriving industries in shambles. Crypto, on the contrary, has been generating jobs across a variety of functions in India and abroad. There are over 300 startups generating tens of thousands of jobs and hundreds of millions of dollars in revenue and taxes. A blanket ban will not only affect investors, but also honest businesses, the employment of thousands of people, and our economy adversely.
A ban will also lead to an increase in OTC markets and fake exchanges. In fact, in 2018, the Russian government also ruled that crypto is not legal tender but a digital financial asset. They cited the reason that legalizing crypto use would lessen fraud and bring transparency whereas banning it would lead to an emergence of a black market. The FATF has also laid some guidelines at the recent G20 summit suggesting crypto is not a threat to the economy.
Looking around, developed countries like the USA, UK, Switzerland, Japan, New Zealand, etc. are taking steps to understand and regulate crypto assets. These nations are among the top drivers of Bitcoin adoption because of the presence of a crypto regulatory framework. This has also resulted in top global FinTech giants and institutions embracing Bitcoin. Singapore’s DBS Bank is going to offer crypto, Tesla has recently bought $1.5 Billion USD worth Bitcoin, Nasdaq-Listed MicroStrategy has bought over $425 million worth Bitcoin, PayPal allows all of its ~350 million users access to buy crypto assets on its platform, MasterCard has announced bringing crypto onto its network, Square has invested 50 Million USD in Bitcoin, and many more. Compared to the US and other countries, India has lesser institutional participation in crypto, and it’s due to regulatory uncertainty. A blanket ban will deprive Indian companies of participating in this technological revolution.
Crypto industry is open to being regulated, but a blanket ban is something that will harm the entire country’s financial and technology ecosystem. As industry participants, we understand the ground realities of crypto. We’re also working hard to educate the masses and our lawmakers on the same before any ban is passed in haste. As an industry-wide initiative, we have started an email petition campaign where anyone can write to their local MPs urging them to regulate crypto. Over 15,000 emails have been sent to local MPs via indiawantscrypto.net.
That being said, I believe that positive regulations will give crypto adoption a big boost in India leading to more job creation, and increase in the tax revenue for the government. It will also keep the bad actors at bay, and allow us to innovate. I’m optimistic that our government will take notice, and hold discussions with the crypto industry of India before moving ahead with regulations for this sector.
Nischal Shetty is the CEO of WazirX. Views expressed are the author’s own.