The Finance also mentioned that they would have to be sure that a futuristic thing can’t be shut out, which augurs well, said cryptocurrency experts.
The government has clarified that it is has no proposal to recognise cryptocoins in a written reply to Lok Sabh on Monday (November 29). The written reply by Finance Minister Nirmala Sitharaman said it does not collect data on Bitcoin transactions.
The Crypto Bill is one of the many items on the list of bills to be introduced in Parliament during the Winter Session.
Raj Kapoor, Founder - India Blockchain Alliance and Chief Growth Officer at Chainsense Ltd, said, "The government's statement comes from the fact that people have fully understood that crypto cannot be a currency because the fundamental element of a currency - that it should be a legal tender. This is missing in this case. "
Kapoor said he has always made a case for treating and regulating crypto as a separate asset class with a view to enabling governments to effectively deal with illegal activities associated with virtual currencies. "The statement seems to be based on these assumptions. The CBDC is the focus for the Government; however, value-based crypto currencies can well co exist."
RBI has been examining use cases and working out a phased implementation strategy for the introduction of Central Bank Digital Currency (CBDC) with little or no disruption, said the Ministry of Finance in a written reply in Lok Sabha.
Regulations are everywhere in the world. The point is how over-reaching are the regulations, said experts. "If governments have over-reaching regulations, people may simply ignore them and continue using cryptocurrencies," said Michael Terpin, CEO, The Transform Group and co-founder BitAngels, the world’s first angel network for digital currency startups, in May 2013.
For instance, Nigeria banned cryptos but their popularity hasn’t dipped, Terpin pointed out. It is difficult to outrightlyban cryptos, he said.
The government's stand to put a blanket ban on crypto currency will have a negative impact on the Indian economy, shared some.
Aliasgar Merchant, Developer Relations Engineer at Tendermint (Tendermint is the core contributor of Cosmos SDK with flagship products such as Starport and Emeris)said, "Apart from immediate effects like drop in value, institutions working on cutting technology like blockchain will loose trust and ultimately there will be a brain drain. While I recognize the potential misuses of crypto, government should be focused on regulating crypto rather than putting a blanket bank on crypto. This brings us to the question will people stop investing in crypto? Decentralized Exchanges like Emeris, Uniswap, etc could be used which will ultimately defy the purpose of ban. This is very similar to banning alcohol in a state. People interested, smuggle the spirit ultimately costing the government millions in taxes.
Praveen Kumar, Founder & CEO - Belfrics Glroup, welcomed the new approach of regulating the industry and curbing privacy coins is a welcome move. The challenge would be that how exactly they are going to define the nature of the privacy coins, he said.
"The blockchain stratups will be able to freely experiment with public blockchains and will be able to list the underlying token in Indian exchanges and raise capital. Indian startups had to seek foreign avenue for token issuances. Now they will have a level playing field within India to showcase their innovations and raise capital. We might witness a volatile market in the near future as there will be speculation on the list of coins that will be approved. Stable coins might be the first one to exit from the Indian exchanges if this bill goes through. From an investor standpoint, the bill will give clarity and confidence to invest in crypto asset class. However, there should be innovative approach to define the allowable cryptocurrencies, as a plain vanilla rule might dampen the investment opportunity," he added.
Edul Patel, CEO and Co-founder of Mudrex, said “The Finance Minister had previously stated that crypto won't be banned, but will be regulated similar to other asset classes. The Indian market sentiment suggests that the government would likely bring in CBDC or Central Bank Digital Currency to be used as currency for tracking the flow of money.”
