Ban Unlikely To Help, Crypto Must Be Regulated: Standing Committee

A parliamentary standing committee meeting held yesterday concluded on the consensus that the digital currency cannot be stopped but that it must be regulated instead. 

Despite there being a consensus that a regulatory mechanism should be put in place to regulate cryptocurrency, industry associations and stakeholders were unable to agree on who should be the regulator, according to an ANI report.

The meeting was led by BJP MP Jayant Sinha and industry associations and experts including the Internet and Mobile Association of India’s (IAMAI) Blockchain and Crypto Assets Council (BACC) participated in it. 

This meeting comes just two days after Prime Minister Narendra Modi chaired a high-level meeting regarding the future of cryptocurrencies in the country. During the meeting, ‘over-promising’ and ‘non-transparent’ advertisements from the industry were also discussed. 

Many members of the parliament raised concerns about investors’ financial safety. As part of the next step towards regulating and governing cryptocurrencies, the standing committee wants government officials to appear before it and testify about their concerns regarding cryptocurrencies.

During the earlier meeting chaired by the Prime Minister, it was pointed out that unregulated crypto markets should not be allowed to become avenues for money laundering and terror financing.

Currently, India doesn’t have a framework or regulation on cryptocurrencies, crypto-exchanges and other platforms that facilitate the use and trade of virtual assets. Due to this, the Indian crypto market operates in a regulatory grey area. 

RBI Governor Shaktikanta Das has repeatedly raised the issue of cryptocurrencies, referring to them as a ‘serious concern’. But this is not to say that there are no developments on the regulations front. In fact, that is happening and multiple levels, albeit discordantly. 

The department of revenue is reportedly preparing a framework to levy taxes on crypto-assets such as NFTs and capital gains on crypto trading. In the meanwhile, the department of economic affairs is finalising the contents of a draft cryptocurrency bill based on a cabinet note prepared earlier. 

Despite the confusion and anxiety regarding its governance, the cryptocurrency market in India is growing at a robust pace and has already produced two unicorns this year—CoinSwitch Kuber and CoinDCX. 

According to a report by Chainalysis, India ranks second among 154 nations in crypto adoption. Investment in cryptocurrencies grew from $923 Mn in April last year to $6.6 Bn in May this year.