India’s crypto industry on wire as bill awaits approval

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Indian Finance Minister Nirmala Sitharaman said a cryptocurrency bill has been submitted to the country’s cabinet and is awaiting approval, according to an Economic Times report. The report quoted Sitharaman as saying: Cabinet note is ready on cryptocurrency [bill]. I wait [sic] cabinet to clear that.

According to the report, a high-level inter-ministerial committee formed in March to study cryptocurrencies submitted a report recommending a ban on all private cryptocurrencies, but not a central bank digital currency. The report supports a 2019 report by another inter-ministerial committee formed in 2017 that recommended a blanket crypto ban and released a bill that provided penalties, including jail time, for violations.

Mixed messages

The findings of the inter-ministerial committees contrast with previous assurances from Sitharamans that India is not closing all options on cryptos, which themselves were at odds with the line taken by the country’s central bank, which asked several times a ban on cryptos.

In March, Reserve Bank of India Governor Shaktikanta Das said there were no differences of opinion between the central bank and the Ministry of Finance. Last month, the RBI Deputy Governor said: Private virtual currencies are largely opposed to the historical concept of money. They are not commodities or claims on commodities because they have no intrinsic value… They are not money (certainly not a currency) as the word has come to be understood historically.

Since last year, the Indian government has been undecided on whether to implement a comprehensive ban or adopt a more flexible regulatory approach. The crypto bill was first introduced in this year’s parliamentary budget session, but was never read. If the cabinet note is approved by November, the bill could be discussed in the winter session of parliament.

If enacted, the legislation could deal a fatal blow to India’s crypto industry, which has even caught the attention of Silicon Valley venture capital titans such as Mark Cuban and Tim Draper. Unocoin CEO and Co-Founder Sathvik Vishwanath told Forkast.News: It will definitely be a fatal blow, I think, for the entire industry.

Vishwanath said crypto investors, many of whom have invested a substantial portion of their savings in crypto, are most at risk of losing. According to industry estimates, there are around 15 million cryptocurrency investors in India and 350 startups in the crypto space. At the end of last month, the government admitted that it had no data on cryptocurrency transactions, number of exchanges or users, or taxes levied on crypto profits.

Data gap

Vishwanath described governments thinking as short-sighted because it was not a decision made on the basis of solid data. The main concern of the government has been to eradicate the use of crypto for payments and therefore to stop money laundering and other illicit activities using crypto.

However, Vishwanath said that all technology can be misused for illicit activities and cutting down on technology is not the solution. He said: Just because it can be used by bad actors doesn’t mean it needs to be curtailed in any way. So we have to find ways to keep [malicious actors] through regulation, but on the other hand, increasing technology through innovation.

In a written statement, Nischal Shetty, CEO of crypto exchange WazirX, said: We do not know the final pieces of the bill and what it means for the crypto community and businesses in India. Emerging technologies like blockchain and cryptocurrency, [artificial intelligence] and [machine learning] hold the key to future economic development. With our large tech-savvy population, we are uniquely positioned to adopt, develop and pioneer in the tech space.

CoinDCX, a crypto exchange that turned into a unicorn earlier this month, declined to comment for this article.

Vishwanath said a blanket ban could lead to a bitter legal fight, pitting crypto firms and investors against regulators, given that there are large companies in the space armed with far more data than before.

But he said he was more concerned with a period of hibernation, or downtime, that businesses have to deal with while proceedings unfold.

We could go back two or a year again, he said, adding that such a development would be similar to the industry’s position in India after the RBI ordered lenders to stop crypto transactions. -mint in 2018, a directive that was overturned by the Supreme Court early last year.

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