India can tighten rules, not a complete ban, says Zebpay
India is set to propose new cryptocurrency bill to parliament, and investors are trying to understand what this could mean for the future of virtual coins in South Asia’s largest economy.
According to a top manager at Zebpay, one of India’s largest crypto exchanges, lawmakers could ultimately choose to impose strict regulations on the crypto market instead of banning private coins.
“I am convinced that we will have coherent regulation, but on the harder side,” Avinash Shekhar, co-CEO of Zebpay, told CNBC’s Squawk Box Asia on Thursday.
A November 23 parliamentary bulletin showed that the government plans to present a new bill regulating digital currencies when parliament begins its winter session on Monday.
With this bill, India seeks to ban most private cryptocurrencies and create a framework for the creation of an official digital currency that will be issued by the Reserve Bank of India. However, it will “allow certain exceptions to promote the underlying technology of the cryptocurrency and its uses,” the bulletin states.
… the feelers we get from the government are that they are looking for some kind of regulation, strict regulation, but not a total ban.
The central bank is considering a digital Indian rupee, which reportedly could launch a pilot in the second quarter of 2022.
Shekhar told CNBC that the government’s stance on cryptocurrencies has changed in the past eight to nine months after officials consulted with various stakeholders, including crypto exchange operators.
“The government has expressed many positive vibes. We met with Parliament’s Finance Committee about two weeks ago, ”he said. “The message or feelers we get from the government is that they are looking for some kind of regulation – strict regulation, but not a total ban.”
In March, India was considering a law banning cryptocurrencies, fined anyone who trades in the country or even owns such digital assets, Reuters reported, citing a senior government official.
Since then, New Delhi has changed its stance slightly and is now trying to discourage crypto trading by imposing high capital gains and other taxes, according to the news agency.
Prime Minister Narendra Modi delivered a keynote address at the Australian Strategic Policy Institute’s Sydney Dialogue earlier this month, saying that all democratic nations must work together on crypto to “ensure it doesn’t fall into the wrong hands, which can ruin our youth”.
When Treasury Secretary Nirmala Sitharaman was asked by the Hindustan Times whether India should have its own cryptocurrency, she allegedly said, “We have to be careful, but we have to think it through.”
Zebpay’s Shekhar said officials talked about strict regulations because “they obviously control this and don’t want crypto to become a currency, so to speak.”
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He explained that potential regulations would have to address the needs of India’s retail investors – although no official data is currently available, media reports suggest that there are around 15 to 20 million crypto investors in the country.
“The other side that is not much talked about is innovation in technology,” Shekhar said, adding that many innovators are still waiting to enter the crypto market.
“With regulation in place, I think this will be an important area where I think multi-billion dollar companies are starting up in India,” he added.