Union Finance Minister Nirmala Sitharaman has said that India is not against Blockchain technology but wants it to contribute to fintech and other sectors. India is not comfortable with the technology used for tradable assets, Sitharaman said in the US on October 16, 2022, adding that some regulations will come out soon.
We reached out to some crypto stakeholders to find out what they think will be the way forward in light of India’s stance on the issue.
Sitharaman’s stance
Sitharaman is on an official visit to the United States.
On 16 October 2022, PTI quoted her as saying, “We don’t want technology to be disrupted. We want the technology to survive, and also to be in a position for FinTech and other sectors to benefit from it.”
During the visit, she will attend the annual meeting of the International Monetary Fund (IMF) and the World Bank, and the G20 meeting of finance ministers and central bank governors (FMCBG).
“But if it is about platforms, i.e. trading of assets created, and for buying and selling, and profit, are we able to determine for what purpose it is used? Are all the countries able to understand the money trade?” she said.
Sitharaman said misuse of the technology to use it for illegal activities, such as money laundering, drug abuse and others, is an area of concern.
She also mentioned examples of the Enforcement Directorate (ED) discovering significant money laundering activities, and cases related to, among other things, crypto.
She said other G20 nations had the same problems, acknowledging this aspect of misuse of the technology for illegal activities.
“There is an understanding that we must have some form of regulation, and that all the countries must be together about it. No country will be able to handle it easily. So we definitely want something,” Sitharaman said.
She said that India would like to work with institutions associated with the G20 or the World Bank or others to address this issue around misuse of technology and then table the findings at the G20 meetings.
India will assume the presidency of the G20 from December 1, 2022 to November 30, 2023, and is expected to host over 200 meetings during the period.
How does the industry feel about this?
Positive for FinTech, other sectors: Sharat Chandra, co-founder, India Blockchain Forum, said Sitharaman’s acknowledgment that the technology should not suffer at the expense of regulation has “sent a positive message to developers and entrepreneurs in the crypto-technology space. “It is a significant development for the digital asset and fintech industries ,” he says.
According to Chandra, “India’s G20 presidency will further strengthen Indian leadership in shaping the discourse collectively on regulation of virtual digital assets”.
Rajagopal Menon, Vice President, WazirX, a crypto exchange, says that if India can successfully embrace Blockchain technology, then the dream of a $5 trillion Atmanirbhar Bharat will happen sooner rather than later.
Possibility of crypto frames: According to Ashish Singhal, co-founder and CEO, CoinSwitch Kuber, a crypto exchange, the G20 presidency will give India a huge opportunity to drive and influence a common global standard.
“In many ways, we are at the crossroads of Web 3.0 and crypto, much like we were in the early 1990s when the Internet gave rise to new business models that rewrote the old norms. Countries that were quick to react and adapt regulations then, are leading in technology today, says Singhal.
Singhal further says that technology is developing very quickly, and therefore it is important to adapt and react to the changes.
Says Mohammed Roshan, CEO and Co-Founder, GoSats, a Web 3.0 analytics company, “With the crypto industry and its stakeholders desperate for regulatory clarity, an overarching technology-driven legal framework for the country definitely seems to be on the cards sooner than later.”
He adds, “The future of crypto in India, at least in the short to medium term, will depend on whether these regulations are positive or not. First, we can hope for a fairer tax policy that can balance investors’ sentiments along with the government’s plans to generate income from the sector. The Finance Minister is also right about how we need a global standard of regulation, rather than each nation having its own policy. After all, the transformative potential of crypto is not tied to any specific jurisdiction, but spans worldwide.”
The government’s position is contradictory: Ajeet Khurana, founder of Reflexical Pte, a Singapore-based Web 3.0 venture capitalist firm, says the recognition of the potential of the underlying technology is an admirable step. That said, the contradiction arises when the regulator supports the technology but not the underlying economics.
“Although it is a technology-driven regulatory framework, sooner or later, all governments will have to take an unequivocal stance on digital assets,” adds Khurana.
