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'Govt should regulate cryptocurrencies, not ban them'
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SME Times News Bureau | 16 Apr, 2021
As government plans to come up with a Cryptocurrency Bill, sector
stakeholders have said that the government should regulate the
cryptocurrency ecosystem, rather than banning them.
Experts are
of the view that India should formulate regulations in the lines of the
development countries which regulate these currencies including the US,
UK, Japan, Australia among others.
Nischal Shetty, Founder &
CEO, WazirX said: "India's crypto policy should be geared towards
fostering innovation, and customer safety. We should be able to prevent
bad activities but keep the door to innovation open by allowing
everything else to be built."
He said that so far there is no single regulator in a position to regulate the entire crypto sector.
"It's
like trying to regulate the Internet with one regulator. We can start
breaking down crypto based on its classification as currency, asset,
utility, security, and let regulators handle the respective crypto.
Eventually, it will become necessary to have a dedicated crypto markets
regulator," Shetty said.
He also recommended that the government
should ensure that all crypto businesses catering to Indian customers
are registered in India and follow KYC and AML policies. "There should
also be guidelines for crypto businesses to ensure safety of customer
funds," the WazirX CEO said.
Dev Sharma, Regional Manager
(Central Asia) for Paxful also said that at a foundational level, India
should regulate so that all companies have to implement KYC and AML
processes to protect consumers.
"There is nothing about
cryptocurrencies that make them more appealing to 'bad actors' than fiat
currencies. So, cryptocurrencies need to be regulated in similar ways,"
he said.
In addition, it would be great to see India develop
measures to promote innovation in the sector for example with incubators
and start-up funds.
Sharan Nair, Chief Business Officer of
Coinswitch was of the view that to begin with government should open up
discussions with relevant stakeholders.
"The government can look
into the regulatory policies adopted by countries that are betting big
on this industry. The government can create a regulatory sandbox to
identify policy gaps and see how best to fill them," he said.
Talking
about the difficulty in banning cryptocurrencies, experts have
suggested that in technical terms, the only way to ban crypto assets is
to shut down the internet.
"Even if any country passes a law to
ban crypto, it is almost impossible to enforce it. In fact, countries
that have tried banning it in the past have seen the underground market
for crypto assets grow exponentially. There is no way to put checks and
identify participants of underground markets," Nair from Coinswitch
said.
Industry players also suggest that Indian players are doing good in the segment and the country can lead in terms of technology.
Nair told IANS that India is a booming crypto market, and it has more than 80 lakh users.
Noting
that there is a lot of venture capital investment coming into crypto
companies and many Indian crypto companies are building solutions and
protocols which are getting globally recognised, he said: "India has the
potential to be leaders in this industry globally."
Shetty, Nair
and Sharma are members of the Blockchain and Crypto Assets Council
(BACC) of the Internet and Mobile Association of India (IAMAI).
Industry
body IAMAI also has appealed to the government not to ban
cryptocurrency, while saying that a robust mechanism to regulate the
ecosystem is needed.
The government is in the process of
formulating a Bill on cryptocurrencies. While the contents of the Bill
are not yet known, the Centre in February had said that the Bill would
seek to ban all private cryptocurrencies such as bitcoin and ether.
However, in the recent past, the government had hinted that it would take a ‘calibrated approach' towards digital assets.
In
March, Finance Minister Nirmala Sitharaman said that all windows on
cryptocurrencies will not be closed down, bringing relief to the
stakeholders.
Earlier this month, Reserve Bank of India Governor
Shaktikanta Das also said that the central bank has flagged major
concerns over cryptocurrency to the government.
"Both RBI and
government are committed to financial stability. We have flagged certain
concerns around cryptocurrencies which are being traded in the market.
We have flagged certain major concerns to the government, and it is
still under examination in the government and government will come out
with a decision or sooner than later," he said at an event.
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