The recent news on the government listing a bill that proposes to ban all private cryptocurrencies has fuelled much speculation in the industry. While the bill has not yet been seen and is expected to be tabled in the current budget session of the parliament, crypto players are unsure about how the government will ban such deregulated currencies in the first place.
Experts still see some positive developments, such as the drafting of a National Strategy on Blockchain by the Ministry of Electronics and Information Technology (MeitY) and the RBI’s move to introduce a digital currency for the country (many believe it could or should be dubbed 'BharatCoin').
These moves can establish the benefits that blockchain and digital currencies can bring to public services, on account of their transparency and immutability.
“By nature, cryptocurrency or its underlying framework Blockchain can be labelled as ‘private’. Looking at the Indian cryptocurrency market now and the growing investor confidence in the digital asset as an alternate investment class, there are very slim chances that the bill will have a negative impact on the industry. Even if the bill puts restrictions it will be in the fiat trading space as preventing Indian users from trading between cryptocurrencies and holding cryptocurrency in decentralized wallets may not be possible. As of now, all eyes are on whether the bill will spur India in maximizing the potential of Blockchain or fall behind in the global economy race,” observes Monark Modi the founder and CEO of Bitex.
Market experts point out that globally, cryptocurrencies such as Bitcoin are considered a fully public currency, owing to their public nature whereby participants can verify transactions. Since it is not under the control of any individual or organisation a complete ban is practically impossible. Many feel that the manner in which the industry has witnessed an exponential growth in terms of adoption cannot go unnoticed.
“A probable ban would mean leaving 7 million-plus people who currently hold assets worth over $1 billion in the lurch, which eventually could have an adverse impact on an economy already battered by the pandemic. However, RBI’s intent to explore CBDC (central bank digital currency) has a positive stance for the industry, considering most developed economies such as England, Canada, Japan, Singapore, Hong Kong are already at advanced levels of designing such systems while also exploring use cases such as cross border payments,” remarked Sumit Gupta, Co-founder and CEO, CoinDCX.
Experts agree that regulators’ concerns emanate from fears and uncertainties over the movement of funds out of the country. Gupta feels that in this context what needs to be also considered is that industry operators have been monitoring operations in an extra-cautious mode, besides practising a stringent KYC process while on-boarding. Analysts point out that the sector uses ML (Machine Learning) and AI (Artificial Intelligence) to vouch for transparency.
Advocates and experts in favour of cryptocurrency and bitcoin feel that every disruptive industry needs time to scale up and regulations in parallel will offer the right patronage.
“Public blockchains like Bitcoin (BTC) and Ethereum (ETH) will be the financial building blocks of tomorrow. Recognising them will help India with new job opportunities and accelerated GDP growth. While we are working towards building more understanding we are also confident the government will indulge both public and private stakeholders at the national level, form a common consensus as banning is just not the solution” adds Gupta.
