The recent surge in the value of Bitcoin has generated widespread interest in the world of virtual currency on a global scale. However, India is currently facing a conundrum regarding the regulation and recognition of cryptocurrency. Speculation is rife about the government’s potential intention to prohibit private virtual currencies and introduce an official digital currency, leading to a multitude of unanswered questions.
Indian legal experts and investors concur that a ban on cryptocurrency is not the optimal solution. The consensus is that such a blanket prohibition could result in substantial investment losses for India. Despite the absence of regulations, Indian crypto start-ups have managed to attract significant funds from foreign investors. Nevertheless, the lack of proper regulations could potentially foster an increase in illicit market activities.
Akshay Aggarwal, managing trustee of Blockchained India, expressed disappointment with the perspective Indian regulators have adopted towards a technology that has the potential to enhance transparency and facilitate positive contributions on a large scale. Aggarwal recommended to the finance ministry the establishment of light-touch regulations to foster the growth of innovators while safeguarding consumer interests.
Aggarwal underscored the necessity for a more transparent and progressive regulatory process, emphasizing the importance of instilling confidence in local innovators. Instead of enforcing a ban on the industry, he emphasized the significance of investing resources to gain a deeper understanding of the industry and implement measures for capacity building.
The future of cryptocurrencies in India remains uncertain due to the lack of government recognition and regulation. The Central Government has announced plans to introduce a new bill on cryptocurrencies, titled “The Cryptocurrency and Regulation of Official Digital Currency Bill 2021,” although details on the content of the bill are yet to be disclosed.
Speculations have arisen that the new bill could potentially impact existing investors involved in private digital currencies like Bitcoin. The recommendations put forth by the Inter-Ministerial Committee (IMC) on virtual currencies could also influence the bill’s content.
Anirudh Rastogi, founding and managing partner of Ikigai Law, highlighted that a ban on cryptocurrencies would diverge from the approach adopted by most developed economies, which are opting to regulate cryptocurrencies to harness their potential and manage associated risks. This approach would be more advantageous for India’s cryptocurrency sector, which is home to approximately 350 startups that could face extinction without the support of proper regulations.
Despite the uncertainty surrounding the future of cryptocurrency in India, experts believe that cryptocurrencies are a permanent fixture due to their ability to be transferred from person to person without an intermediary. Anoush Bhasin, a thought leader in the Indian cryptocurrency space, emphasized the necessity for a measured and light-touch approach to nurture this global phenomenon, rather than implementing a complete ban.
As the debate on the future of cryptocurrencies continues, the ultimate outcome remains to be seen. Only time will reveal the direction the Indian government will choose to take in this ever-evolving landscape.
