FM’s push for ‘calibrated’ approach on crypto trading calms frayed nerves
Finance minister Nirmala Sitharaman’s statement that India will take a “calibrated" approach on crypto trading has calmed frayed nerves in the industry.
In an interview on Saturday, Sitharaman told CNBC TV18 that “negotiations and discussions" are on with the Reserve Bank of India (RBI) to regulate cryptocurrency.
“Obviously, RBI will be taking a call on what kind of official currency, cryptocurrency will have to be planned and how it has to be regulated," she said.
“The FM’s stance on ‘considering a calibrated approach’ is an encouraging sign. We are a 100-plus staff company with some of the best talents from premier institutes like IIT," said Sumit Gupta, founder of crypto exchange CoinDCX.
“We believe crypto as an asset has huge potential and, if properly administered, can help India earn sizeable revenue," he added.
The cryptocurrency industry has been urging the government to reconsider a possible blanket ban on crypto trading over the past month.
The issue began when the government’s plan to “create a facilitative framework for creation of the official digital currency" was announced in the agenda for the budget session of Parliament last month.
The bill is expected to “prohibit all private cryptocurrencies in India", a clause that led many to believe that dealing in bitcoin, ethereum and other crypto assets may become illegal.
“There have been positive developments around crypto. Ministry officials are taking a judicious approach to creating an inclusive regulatory framework. With the recent global developments, the government is of the opinion that a unilateral view of restricting it is not going to help, considering India is at the forefront of the fintech ecosystem. The industry is optimistic with the stance taken and would love to initiate dialogue with the government to resolve any issues,” said Gaurav Dahake, chief executive officer (CEO) of Bitbns, another crypto exchange.
Nishchal Shetty, founder of WazirX, the largest crypto exchange in India, pushed for innovation in the ecosystem via a tweet on Saturday.
“Our FM Nirmala Sitharaman has made it clear that India will compete globally in crypto," Shetty tweeted.
Despite fears of a ban, the cryptocurrency industry has seen increased trading volumes over the past month.
WazirX, on 4 March, announced it touched $2.4 billion in trading volumes in February, nearly double its January numbers.
Data from crypto tracking firm CoinGecko showed 24-hour trading volumes on WazirX and Zebpay stood at over ₹200 crore and ₹66 crore, respectively.
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India May Allow Experiments In Crypto Instead Of Ban, Says FM Sitharaman
The FM added that in the fintech space, India led the way and many countries are looking to emulate India’s fintech-based developments
Finance Minister Nirmala Sitharaman said that the government is holding talks with the Reserve Bank of India and will take a very calibrated position on the matter
Suggesting that a blanket ban on cryptocurrency may not be on the cards, Finance Minister Nirmala Sitharaman said that the government is holding talks with the Reserve Bank of India and will take a very calibrated position on the matter.
Sitharaman added that as the world moves fast with technology, India can’t look the other way. The FM added that in the fintech space, India led the way and many countries are looking to emulate India’s fintech-based developments.
“We want to make sure there is a window available for all kinds of experiments which will have to take place in the crypto world. It is not as if we are going to look inwards and say we are not going to have any of this. There will be a very calibrated position,” the FM told CNBC-TV18.
In January, the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, was listed in the Lok Sabha bulletin. The bill has been slated for discussion and passing during the ongoing budget session of Parliament. The synopsis of the bill reads: “To create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India. The bill also seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.”
Various source-based media reports last month had said that through the bill, the government is looking to ban all ‘private’ cryptocurrencies such as Bitcoin and Ethereum, i.e. those not issued by the state. The reports had suggested that crypto investors would be given a three-months transition period to exit the space. Some reports had also suggested that the government may bring in the bill as an ordinance, thus bypassing the debate on the bill in Parliament.
Indian crypto stakeholders, who’ve been lobbying in support of positive regulation for the sector against an outright ban, have welcomed Sitharaman’s recent statement.
Sumit Gupta, cofounder and CEO at CoinDCX said, “The FM’s stance on ‘considering a calibrated approach’ is an encouraging sign. We are a 100 plus staff company with some of the best talents emerging out of some of the premier institutes of India like IIT. We are a homegrown entity. Our products are made in India, catering to the appetite of the Indian masses. We care for them and the law of the land. Hence, we diligently follow KYC norms and adhere to regulatory practices.
“We have always reiterated the need for regulation, taxation and transparency for our sector. As an Indian fintech firm, we are also building global level products. We believe crypto as an asset has huge potential and if properly administered can help India earn sizeable revenue,” he added.
India’s Bitcoin Exchanges Breathe Sigh of Relief As Gov Reconsiders Crypto Ban
India’s government is considering a bill to limit cryptocurrency use in the country. Image: Shutterstock
In brief India’s finance minister said the government encourages a window of experiment for crypto.
Indian crypto industry representatives told Decrypt it could mean that a total ban is off the table.
After much speculation about whether India will introduce a blanket ban on crypto, the government has finally dropped a major hint that it will not do so. The Indian crypto industry representatives told Decrypt that their constructive engagement with the government has paid off.
Nirmala Sitharaman, India’s Finance Minister, said yesterday on India’s business channel, CNBC-TV18, that the government’s position on crypto will be “calibrated” and it wants to make sure there’s “a window available for all types of experiments in the crypto world.”
“A lot of negotiations and discussions are happening around cryptocurrency with the Reserve Bank of India,” she said. “[India’s Central Bank] will be taking a call on what kind of unofficial cryptocurrency will have to be planned and how it has to be regulated.”
“So, we are not closing our minds, we are certainly looking at ways in which experimentations can happen in the digital world, cryptocurrency and so on.”
An exception for blockchain tech
In January, the Indian Parliament tabled the “The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021.”
The bill didn’t say much, except that it seeks to ban all “private cryptocurrencies”, save for certain unnamed exceptions (“to promote the underlying technology of cryptocurrency and its uses”), and introduce a framework for a central bank digital currency (CBDC).
That fuelled much anxiety in the Indian crypto industry. The exceptions in the draft bill were only granted to blockchain technology while remaining hawkish on cryptocurrencies.
As Decryptreported last month, following the announcement of the draft bill, several leading industry leaders coordinated efforts to fight off a total ban and push instead for a regulatory approach. Sitharaman’s statement yesterday was pretty much what the industry had hoped for, they told Decrypt.
Crypto ban no more?
Nischal Shetty, CEO of crypto exchange WazirX, told Decrypt that the Indian crypto industry sees this as the clearest sign yet that the government will not go ahead with a blanket ban on cryptocurrencies as previously feared.
I think @nsitharaman just won the entire Crypto sector in India with this clarity she’s given India is going to take a calibrated view on Crypto People of India, get ready to innovate and win. Crypto Innovation: Here we come 🚀#IndiaWantsCrypto https://t.co/4wFIPPFHOd — Nischal (WazirX) ⚡️ (@NischalShetty) March 5, 2021
“It’s amazing news for the Indian crypto industry,” he told Decrypt. “Our finance minister has now made it clear that India will not be banning crypto.”
For Shetty and others in the crypto industry campaigning against a ban, the next step is now to get the government to involve the crypto industry in policy-making. “This will help formulate the right crypto regulations in India,” he said.
Why has the government cooled its tone?
Sidharth Sogani, CEO of the Indian crypto intelligence firm CREBACO, told Decrypt that it’s the industry’s persistent dialogue with the government that has prevented a blanket ban.
Sogani, who also heads the industry pressure group, the Association for Blockchain, Crypto, and Digital Asset Entrepreneurs (ABCE), knew there wasn’t going to be an all-out restriction as the government asked “very inquisitive questions”, signaling that careful consideration is being paid with a regulatory framework in mind.
As mainstream institutions flock to the crypto space, the Indian government has seen crypto as an unmissable global trend, according to Sohail Merchant, CEO of the Indian crypto exchange PocketBits.
PocketBits is one of the members of the Blockchain and Cryptocurrency Committee (BACC), part of the wider tech industry association Internet and Mobile Association of India (IAMAI). BACC has been campaigning for a regulatory framework instead of an outright ban.
“The Indian government realizes that crypto is being adopted globally by corporations like PayPal, Tesla and top-tier banks,” Merchant told Decrypt. He reckons the best-case scenario is that the draft bill is referred to a standing committee to deliberate and modify it in a way that creates a regulatory framework that accommodates what he calls “India’s lead in the fintech space.”
“The world looks up to us for innovation.”
Day 855 Crypto is a $1.5T market. It is poised to grow 10X to $15T in ten years. If India does not participate then India loses a large market to other countries. Crypto can help India realise its $5T economy goal. Let’s compete and grow our economy 🚀#IndiaWantsCrypto — Nischal (WazirX) ⚡️ (@NischalShetty) March 5, 2021
But for others in the crypto industry, it is not so much the global influence but rather the logical conclusion of an inward-looking policy platform. Sumit Gupta, CEO and co-founder of CoinDCX, told Decrypt that the “finance minister’s statement is a sign of the government’s resolve to digitize India and make us Atmanirbhar,” referring to Prime Minister Narendra Modi’s doctrine of a “self-sufficient India.”
We as an industry are engaging with relevant stakeholders on the proposed crypto bill. Leading crypto companies, VCs, and experts have joined hands to build public awareness among policymakers and public about crypto through #IndiaWantsBitcoin campaign https://t.co/3Ly4kcnURi https://t.co/eFDXd4N6Ja — Sumit Gupta (CoinDCX) (@smtgpt) March 5, 2021
Either part of a global trend or an insular move, the latest announcement is set to calm India crypto’s regulatory FUD.