There were mixed reactions from the industry experts on the future of cryptocurrency in India. While some said that the importance of cryptocurrency has soared given the fact that it was mentioned in the Union Budget, some feel that it does not have the potential to become a legal tender given the fact that it can be a major cyber threat. Some even felt that more clarity is required on the subject as there is still lot of confusion prevalent in the Indian market regarding cryptocurrency.
Experts such as Prashant Phillips, Partner, Lakshmikumaran & Sridharan (L&S), an Indian law firm, feel that since the finance minister confirmed that cryptocurrency is not a legal tender it is likely to impact the growing interest in cryptocurrency, especially Bitcoin. “Bitcoin has seen a stellar increase in popularity and was being traded at more than a million rupees earlier this year. Owing to this, it is still considered as a lucrative investment option for individuals who want to see quick returns. Cryptocurrency is not without its own problems. The cryptocurrency exchange market is highly volatile. Furthermore, absence of laws or regulation and cryptocurrency being equated to Ponzi schemes indicate that cryptocurrency is far from being a reliable investment platform. With the government clearly indicating that it will discourage cryptocurrency will impact the use of cryptocurrency in India,” said Phillips.
He further said that since there have been reports earlier this year of a government committee submitting their recommendations to regulate the trading in cryptocurrency, it remains to be seen how the cryptocurrency question will be tackled in the coming year.
On the other hand experts such as Aniketh Jain, CEO and co-founder of Solutions Infini Pvt. Ltd felt that even though it was announced that cryptocurrency is not a legal proposition and the usage of the same is discontinued by the government, the usage and need of block chain technologies will not be discouraged and will be looked upon case by case, which is a positive sign. “The underlying assets of cryptocurrencies have been volatile with heavy price fluctuations. The roots of cryptocurrencies and the related transactions are not extravagantly transparent making them more questionable. Hackers are gaining most out of this scenario as the difficulty of tracing the roots of accounts and transactions are very high. There have been several instances where the accounts of the investors have been prone to hacker attacks and there's no established mechanism to revive the accounts from the hackers. The vulnerabilities of losing money invested in these accounts is extremely high as there are no pre-conceived notions to revive the hacker's attack, paving them ways to swag the wealth,” remarked Jain.
Similarly experts such as Ankush Johar, Director, Infosec Ventures an organisation that provides infrastructure security solutions for commercial and government organisations is of the view that more clarity is required on the subject as cryptocurrencies are not a legal tender is a statement that was made earlier as well, and it is true and very likely that cryptocurrency is being used for illegitimate transactions,” said Johar.
For some experts such as Sunil Sharma, Managing Director Sales for Sophos, India and SAARC, cryptocurrency is popular with cybercrooks and usually cryptocurrency is the end, rather than the means of the crime. “It has happened that crooks infect your computer with coinmining software to hijack your CPU to earn money, or scramble your data with ransomware and demand that you pay them in cryptocoins to get it back.” said Sharma.
Industry bodies such as the Blockchain and Cryptocurrency Committee of the Internet and Mobile Association of India (IAMAI) felt that by the mention of cryptocurrency in the Union budget, finance minister has recognised the importance and popularity of cryptocurrency. As far as the exact content of what was said, the body is neutral-to-positive about it. The body is also however, pained to see the finance minister's words being misinterpreted and misreported.
“We understand the government's position in wanting to eliminate the use of crypto-assets as part of the payment system. Since we are committed to support every regulation that the government brings in, we will work with the government to help it achieve its stated objective. When a platform as significant as the union budget speech mentions cryptocurrencies, it is clear that the sector is coming of age. We welcome this positive development, and see it as an important milestone in the journey to policy-clarity and consumer-education,” IAMAI said in a statement.
Interestingly, the Blockchain and Cryptocurrency Committee of India (BACC) is formed under IAMAI and most of the cryptocurrency exchanges are members of the BACC.