Indian Gov Should Establish Regulatory Mechanism for Cryptocurrency: IAMAI

India’s Cryptocurrency players, represented by IAMAI (Internet and Mobile Association of India) welcomed the Finance Minister Nirmala Sitharaman’s comments 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.

Appreciating the positive development, IAMAI appealed to the Government of India not to ban cryptocurrency, proposing to develop robust mechanisms to regulate the ecosystem.

Cryptocurrency has been generating jobs across a variety of functions — legal, compliance, tech, marketing, business development, finance, etc. — in India and abroad. Given the scale and diversity, the good governance and regulation of the cryptocurrency ecosystem in India is critical and will give impetus to Government of India’s Digital India vision.

India is also witnessing considerable rise in digital assets. According to IAMAI, “The crypto community consists of over 10 Million crypto holders holding over $1 Billion worth crypto assets, 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.” Therefore, 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.”

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. 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.

Drawing attention to established cryptocurrency regulatory frameworks from developed economies, Mr Nishith Desai, Founder, Nishith Desai Associates mentioned that “US, Japan and other developed countries have a positive outlook towards crypto and are considering setting up of regulations for crypto”. Mr. Desai further added “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.”

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

With a special emphasis on regulation of crypto market in India, Mr Naveen Surya, Chairman, Fintech Convergence Council and Chairman Emeritus of Payments Council of India (PCI) said, “Through AML/CFT and KYC related compliances, the government can ensure a safe and secure crypto market for investors. As India develops its CBDC, the regulatory framework can also define the bridge between the proposed digital INR and public blockchain cryptocurrencies from a forex standpoint”.

Addressing the challenges faced by the Industry, Mr. Sumit Gupta, CEO & Co-founder, CoinDCX remained confident about the outcome. He said, “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. Recently the FM expressed her view which reflected the government’s maturity and progressive attitude towards the crypto sector.” Mr. Gupta further added, “One must understand, the crypto industry in India is home grown, with entrepreneurs who come from premier institutes. Those who are invested in crypto are people who understand internet and do their research well. Imagine 20% of our clientele consist of women who come mostly from Tier-1 & Tier2 Cities. On the other hand, like all other fintechs we too understand the value of investor education, infrastructure security, insurance, and strict KYC controls in place, and have used this understanding as a basis to work on a self-regulatory framework as well.”

Stressing the need for collaborative effort amongst regulators and industry Mr Nischal Shetty, Founder & CEO, WazirX stated that “Indian Crypto industry has 10 Million+ Indians holding assets over Rs. 10,000 crores and this number is rapidly increasing. Crypto is a $1.5 Trillion dollar industry. Keeping in sync with our Prime Minister’s Aatmanirbhar Bharat campaign, it is important that India remain competitive in the Public Blockchain ecosystem (which cannot exist without Crypto). We look forward to participating in the regulatory process to help formulate the right Crypto policies for India.”

Decoding the interlinkage of the blockchain and cryptocurrency; Mr Rahul Pagidipati, CEO, ZebPay said “We welcome the Finance Minister's latest remarks and also the Minister of State for Finance Mr. Anurag Singh Thakur’s comments that, ”We must always evaluate, explore, and encourage new ideas with an open mind”'. Mr. Pagidipati, added, “If all stakeholders—industry, individuals, and policymakers—work together with this attitude, we're confident India can create a policy framework that allows us to lead the world in this revolution.”

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.