|
|
|
Unwise for India to place bans on private crypto assets: Report
|
|
|
|
Top Stories |
|
|
|
|
SME Times News Bureau | 30 Nov, 2021
A new monograph by the Observer Research Foundation, in collaboration
with the Esya Centre, presents a deep-dive into the growth of
cryptocurrency in India and proposes a balanced regulatory approach.
According
to the study, it would be unwise for India to place bans on private
crypto assets, when it has the ability to capitalise on the opportunity
offered by cryptocurrency.
The report offers key policy
suggestions on building the ideal crypto regulatory framework that would
both benefit India's economy and ensure consumer welfare.
The
Indian crypto asset industry has witnessed exponential growth over the
last five years. Analysts suggest that more than 15 million Indians now
hold digital currencies. As a result, cryptocurrencies, like any other
financial asset, need to be regulated in order to ensure consumer
welfare as well as promote innovation. This is the key finding of
Regulating Crypto Assets in India, a report that has been jointly
published by the Observer Research Foundation and Esya Centre, two New
Delhi-based public policy think tanks.
The report is a
first-of-its-kind deep-dive into the world of cryptocurrency in India –
one of the fastest growing consumer-bases globally. This analysis comes
at a time when New Delhi aims to introduce a bill to regulate the asset.
The report argues that India is well placed to capitalise on
the opportunity that crypto assets present due to its expanding private
crypto market. Hence, it would be imprudent to place a blanket ban on
private crypto assets. This would result in significant revenue loss to
the government and may encourage nascent industries to operate
illegally.
Instead, the report suggests a balanced regulatory
approach, which addresses the concerns of fiscal stability, money
laundering, investor protection and regulatory certainty while fostering
innovation.
"Most regulatory formulae necessary to address the
policy concerns related to crypto-assets, such as investor protection,
foreign exchange management, money-laundering and tax evasion, already
exist in financial legislation," says Meghna Bal. "They just have to be
adapted to accommodate an emerging technological paradigm. The
recommendations in our report show how this can be done."
In
India, classifying crypto as a security, good, or capital asset could
lead to unintended restrictions on investment or leave regulatory gaps
in key policy areas. A sui generis crypto framework that adopts the
nuances of the crypto industry would be more appropriate and in keeping
with emerging global trends.
The report also lays out
suggestions for lawmakers on what a crypto regulatory framework must
include: it must be technology neutral, innovation friendly and
consistent, to fully harness India's potential in this domain. Among
other things, the framework must lay down clear definitions, identify
the relevant regulatory bodies and create KYC/anti-money laundering
obligations, the report says.
The regulatory framework should
also protect crypto asset service providers from being liable for the
actions of investors on their platform. This will help asset service
providers innovate and scale new crypto-based products and offerings.
The
report proposes that the government adopt a co-regulatory approach
where industry associations and authorities such as SEBI, the RBI, and
the Ministry of Finance share the responsibility of oversight. Such an
approach follows the Japanese model, where authorities have tasked
industry associations to enforce regulations. Providing incentives to
industry whistle-blowers could help players within the crypto-market
self-regulate.
What India needs is a facilitative regulatory
framework that would boost the growth of India's crypto ecosystem while
addressing any possible harms to consumers and society at large.
|
|
|
|
|
|
|
|
|
|
|
|
|
Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
|
66.20
|
64.50 |
UK Pound
|
87.50
|
84.65 |
Euro
|
78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
|
|
Daily Poll |
|
|
PM Modi's recent US visit to redefine India-US bilateral relations |
|
|
|
|
|
Commented Stories |
|
|
|
|
|
|
|
|