In 2019, the draft bill was going by the name of “Banning of Cryptocurrency and regulation of official digital currency”. It’s interesting to notice that this time around, there’s no mention of a ban in the bill name. The first part says that there will be a regulation to help RBI create its own CBDC. This is a good thing that the government has shown intent for a CBDC (central bank digital currency) and wants to initiate laws to make it easy for RBI to create its own CBDC. In fact, we believe that the RBI must get a digital version of INR in sync with how China, the US etc. are trying for their own currencies.
However, the second part is about banning private cryptocurrencies with some exceptions. Now, what exactly is a private cryptocurrency? Bitcoin, Ether etc. are public crypto built on public blockchains. The use of incorrect terms such as “private cryptocurrency” or the fact that there’s a thought process which says RBI creating its own crypto removes the need for other cryptocurrencies is a misnomer that we need to clear. Existing cryptocurrencies such as Bitcoin, Ether etc. have their own specific use cases. They are needed to run smart contract and write to the distributed ledger that they’re built on top of. People cannot use INR to pay for fees on the Bitcoin or Ethereum Blockchain. Let’s get this misconception out the door. Every blockchain needs its own native token to operate. INR cannot be used in such cases.
I believe that the government’s concern here is around the usage of crypto as a “currency” or as a payment mechanism. As an industry, we’re in sync with the fact that INR is the only legal tender in India, and about crypto being an asset/utility which people buy and sell. But the thing that is unclear and something that we believe will be in the right direction – is that crypto as an asset and its trading will be allowed in India.
As of today, there are over 7 Mn people who own over $1 Bn worth of digital assets in India. Cryptocurrency is a sunrise sector employing thousands of people in India. There are also tens of thousands of influencers in crypto from India. I’m optimistic that the government is not going to simply ban crypto.
There are agendas and then there are actions. Governments around the world claim they want to support innovative and cutting edge technologies such as AI, ML, Blockchain etc. However, in order to really make a positive difference and go ahead in these technologies, deep expertise is needed. Unfortunately, India hasn’t yet been able to create deep crypto expertise. The lack of regulatory clarity and the hostile nature towards this innovation is to blame for this situation.
As of now, we know that this bill is included in the list of bills to be presented in this Parliament session. If it’s presented, then it will be referred to a standing committee so that they hold discussions with the crypto industry of India before moving ahead with regulations for this sector. After all, this is a really important bill that involves both finance and technology.
Overall, this is a great move forward as it gets us closer to regulations. Regulation is what I’ve been personally pushing for with my #IndiaWantsCrypto campaign as well.
The right crypto regulation will catapult India ahead in this innovative technology while wrong regulation such as a ban on Crypto will set our country back by 10 years. We’ll never be able to catch up with the rest of the world and end up losing a golden opportunity in this sector.
I hope our leaders at least discuss with us industry participants to understand the ground realities of Crypto before going ahead with any bill around this technology.