For good crypto regulation industry needs to be involved: Nischal Shetty

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The Internet and Mobile Association of India (IAMAI) had asked the Supreme Court of India to stay the order in May, but Shetty realized that the case was not going to be enough, as he believed that the main problem was the lack of crypto regulation and understanding of what crypto is.

To solve these two issues, he decided to tweet every day and tag India’s leaders and the right people, pointing out why the country needs to regulate and understand crypto.

One of the prominent policymakers, who responded to Shettys’ tweets from the campaign, was Indian politician from Bengaluru, Rajeev Chandrasekhar, in 2019. Chandrasekhar is now Minister of State at the Ministry of Skills Development and Entrepreneurship; and Minister of State at the Ministry of Electronics and Information Technologies. There were also other ministers that Shetty met but he cannot name them as the discussions were private.

Shetty spoke to Mint about the #IndiaWantsCrypto campaign, which ended over 1,000 days on July 28, 2021, the main challenges the industry has faced in those three years, and what the campaign would aim to achieve. over the next 1,000 days. Edited excerpts:

What was the general mood in the crypto industry when you launched this campaign at a time when the RBI ban on cryptocurrencies was in place?

The situation was pretty bad. WazirX was new, but there were other exchanges, which were older and bigger. Many exchanges were closed and some left the country because they were unable to operate in the country. A lot of people in crypto at the time were really worried and scared about the state of the crypto ecosystem and the future of the investments they had made.

The mood, in general, was low and there was fear among the people. In fact, the general consensus was that crypto was illegal in India and even owning crypto was not allowed. Additionally, the fact that the crypto was in a bear market in 2018 didn’t help either. 2018 was a really bad year for the Indian crypto industry, and people thought about quitting then. But campaigns like IndiaWantsCrypto have kept people motivated.

The campaign ended over almost three years. What were the major struggles during this phase?

Crypto has always been a difficult industry due to the lack of regulatory clarity. From the banking ban in 2018 to the draft law in 2019 which spoke of regulation, which aimed more to prohibit than to regulate.

Then we had a bear market of around 2-2.5 years in 2018 and 2019, investors were demotivated, and we weren’t getting enough money from global venture capitalists or funds to create startups. On top of that, there was confusion over whether the crypto is legal or what the government was going to do to support it or shut down the industry.

On the side of regulators and government, how do you see their perception changed during this period?

Things have changed dramatically. First of all, in terms of growth, the Indian crypto industry has grown from four to five million people in 2018 to 15 to 20 million investors today. Second, out of a handful of startups, many companies are now working in the crypto industry. Moreover, today startups can easily attract investment.

On the regulator side, we have the Minister of Finance (Nirmala Sitharaman) who has spoken of crypto and now the Reserve Bank of India (RBI) has spoken of central bank digital currency (CBDC).

There is also a better understanding of the crypto and industry among the country’s media. Net-net if you see from 2018 to today India has come a long way in terms of every metric you can track in crypto.

Has it become easier to run a crypto business in India?

Compared to before, yes it has become easier, but if you compare it with the rest of the world, it is even more difficult. In the US you have companies that are able to use the initial public offering (IPO) route, they have some sort of licensing process in place and they are clear. It is the same in many parts of the world.

To catch up with the rest of the world, you must first have banking access. Even though the Supreme Court case was won, banking access is still difficult to find for all businesses. There is still fear and uncertainty among the banks and they are not really sure they are serving the industry. Second, we need government direction or more direction. We know the government has talked about putting regulations in place, however, it may take longer, but guidelines may come faster.

Have you responded to the Enforcement Department’s advice to WazirX for violation of the Foreign Exchange Management Act (FEMA)?

We have cooperated with the agency in the investigation so far and are preparing a response to the detailed advice we have received on FEMA violations.

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