Cryptocurrency in India: Facing existential threat, crypto backers seek identity change and regulation

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Cryptocurrency in India: Facing existential threat, crypto backers seek identity change and regulation

MUMBAI: The government’s plan to ban private cryptocurrencies has thrown crypto backers in India into a fight for their survival and their major tool in this battle is to convince the government that cryptocurrencies are not what they are made out to be.

Experts and commentators at the ETMarkets Conclave today pleaded with the government to see the positive side of technological innovation and said that they will welcome any regulations instead of a blanket ban.

“There are enough positive use-cases of cryptocurrencies for India to adopt it rather than ban it,” said Nischal Shetty, founder and chief executive officer at WazirX at ETMarkets Conclave held virtually earlier in the day today.

While the details of the government’s proposal aren’t yet clear given that the Bill has not yet been tabled in the Parliament, it has made India’s over 7 million cryptocurrency owners rather anxious about their holdings.

The Reserve Bank of India Governor Shaktikanta Das, earlier today, said he had “major concerns” about cryptocurrencies, which the RBI has communicated to the government.

Cryptocurrencies, founded by Satoshi Nakamoto, are seen as a threat to the centralised monetary system prevalent in the world in which the central bank is the sole issuer of a currency by fiat of the nation state.

In 2008, Satoshi Nakamoto, an alias used by a person or entity, introduced a white paper to the world describing his model for a peer-to-peer transfer of cash that negates the need for a third entity like a bank to verify that transaction.

Prominent individuals like the US Treasury Secretary Janet Yellen and European Central Bank President Christine Lagarde have already expressed reservations about cryptocurrencies like Bitcoin. Detractors of cryptocurrencies believe that eventually governments and central banks will ban such private money as soon as it becomes a threat to the prevalent system.

Anirudh Rastogi, founder at Ikigai Law and part of a panel discussion at the ETMarkets Conclave, argued that any ban could be contested on the grounds of inhibiting right to expression, right to property and right to trade.

Currently, over 7 million individuals hold crypto assets worth over $1 billion and Shetty expects over 30 million Indian to be owners of crypto assets in the coming 18-24 months provided that such assets aren’t banned.

As Indian investors of cryptocurrencies nervously await the details of the government’s bill, they hope that the government will soften its stance by defining cryptocurrencies as an asset like gold and start regulating it.

“There is a big misunderstanding…you can’t have Bitcoin (a deflationary asset) compete with rupee (an inflationary monetary system). You can’t use Bitcoin for everyday transactions because of its high cost,” Shetty said, as he argued that Bitcoin does not threaten the existing monetary system.

While Satoshi Nakamoto’s invention was aimed at decentralising the global monetary system and avoiding the trappings of having central banks, one may wonder what he will make of Indian crypto enthusiasts abandoning the primary ideals of his innovation.

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