For most of the last decade, India’s attitude toward cryptocurrencies has been, to put it mildly, vague. The current soft lock erodes the country’s potential every day, but recent reports indicate that the country has other ideas.
In March this year, the Department of Corporate Affairs sent a notice that cryptocurrency companies must disclose their assets to the authorities in their accounts. Cryptocurrency holders will also be required to declare total gains and losses, as well as any deposits or advances received from other traders and investors.
Just two weeks ago, there was a report that cryptocurrencies are expected to be criminalized in accordance with forthcoming legislation, including circulation, production, issuance and ownership. So why the sudden change of attitude? Does anyone really know what’s going on?
Not sure if that is uncertain
The MCA’s announcement could not have been more controversial for cryptocurrencies in India. In a Reuters report, Indian Finance Minister Nirmala Sitraman said that the government is taking a balanced approach to regulation and does not close all possibilities. Reducing and reducing positions in various government agencies and organizations requires more attention, but it may not be too late.
India’s leaders in the cryptocurrency industry have long preached a rationale for regulating cryptocurrency and have actively opposed a ban that could harm thousands of companies. The demand for digital assets in the country has never been so high: A quarterly study from 2018 already links every tenth bitcoin (BTC) purchase to the Indian subcontinent. It is safe to assume that this level of interest and demand has increased since then.
The latest message from the MCA may be a sign of the recently used government of cryptocurrencies, and it has been well received by most of the well-known blockchain companies in India, and most of them expect to follow the rules instead of direct bans. In fact, a recent Reserve Bank of India report on currency and finance acknowledges that a central bank’s digital currency may increase demand in emerging markets and improve monetary policy.
However, he also described this concept as “not the only good thing” that could make many of the intermediaries in the banking system unnecessary. Siddharth Sujani, CEO of the research and analysis company Crebaco Global, said this in an interview with Cointelegraph. However, he also added that there are many problems with India’s economic structure and how it does not allow free movement and exchange of currency.
“We have received very positive signals from the government regarding cryptocurrency regulation,” said Shivam Takral, CEO of BuyUcoin, an Indian cryptocurrency exchange, adding:
“We remain optimistic that the government will provide a healthy regulatory environment to ensure the growth of the crypto industry in India.”
Sumit Gupta, CEO of CoinDCX, one of the largest cryptocurrency exchanges in the country, shared his thoughts: “There is a gradual shift in storytelling from what we saw in 2018 to today.” He added: “I am confident that the government will take care of the stakeholders in the cryptocurrency community before deciding on any action.”
Cryptocurrency seems to pose a risk to the national economy in various ways, and without strong regulation, the unregulated economy of digital assets can indirectly manipulate Indian markets. Unlike conventional securities, cryptocurrencies are not backed by tangible assets, and this opens up the asset class for unknown price range and discovery, raising concerns about systemic stability, implications for consumer protection and increased risk of information asymmetry.
The Financial Action Task Force on Money Laundering, an intergovernmental financial organization that fights money laundering and terrorist financing, recently highlighted how the anonymity of some cryptocurrencies can increase the risk of money laundering. However, it also provides guidance on how to reduce these risks by using a combined approach based on old, untested methods.
A well-designed set of rules can improve the transparency and democratization of market participants, while at the same time protecting the markets against malicious players. They say that prevention is always better than cure, and preventive regulation can set the standard for what blockchain companies must follow better to support the country as a whole.