Union Minister of Finance 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 being used for tradable assets, Sitharaman said in the US on October 16, 2022, adding that some regulation would come out soon.
We caught up with some crypto stakeholders to figure out what they think will be the way forward in light of India’s stance on the issue.
Sitharaman is on an official visit to the US.
On October 16, 2022, PTI quoted her as saying: “We don’t want the technology to be disturbed. We want the technology to survive, and also be in a position for the FinTech and other sectors to benefit from it.”
During her visit, she will be attending the Annual Meeting of the International Monetary Fund (IMF) and the World Bank, and the G20 Finance Ministers and Central Bank Governor (FMCBG) meeting.
“But if it is a question of platforms, i.e., trading on assets which have been created, and for buying and selling, and making profits, are we in a position to establish for what purpose it’s being used? Are all the countries in a position to understand the money trade?” she said.
Sitharaman said that abusing the technology to use it for illegal activities, such as money laundering, drug abuse, and others, is an area for concern.
She also cited examples of the Enforcement Directorate (ED) detecting substantial money laundering activities, and cases related to crypto, among others.
She said other G20 nations had the same issues, and acknowledged this aspect of misuse of the technology for illegal activities.
“There is an understanding that we need to have some kind of regulation, and that all the countries will have to be together on it. No one country will be able to singularly handle it. So, we will certainly have something,” said Sitharaman.
She said India would want to collaborate with institutions associated with the G20 or the World Bank or others to solve this issue surrounding the abuse of technology, and then put the findings on the table at the G20 meetings.
India will assume presidency of the G20 from December 1, 2022, to November 30, 2023, and is expected to host over 200 meetings during the period.
What Does The Industry Feel About This?
Positive For FinTech, Other Sectors: Sharat Chandra, co-founder, India Blockchain Forum, said that the acknowledgement by Sitharaman that the technology should not suffer at the expense of regulation has “sent a positive message to builders and entrepreneurs in the crypto-tech space. “It’s a significant development for the digital asset and fintech industry,” 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 its dream of a $5 trillion Atmanirbhar Bharat will happen sooner rather than later.
Opportunity For Crypto Frameworks: According to Ashish Singhal, co-founder and CEO, CoinSwitch Kuber, a crypto exchange, the G20 presidency will provide a huge opportunity to India to drive as well as influence a common global standard.
“In many ways, we are at a juncture with Web 3.0 and crypto, much in a similar way we were in the early 1990s when Internet gave rise to new business models that rewrote the old norms. Countries that were quick to respond and adapt regulatory frameworks then are the leaders in technology today,” says Singhal.
Singhal further says that technology is evolving very fast, and hence, adapting and appropriately responding to the changes is important.
Says Mohammed Roshan, CEO and co-founder, GoSats, a Web 3.0 analytics company, “With the crypto industry and its stakeholders desperate in search of clarity in terms of regulations, an overarching tech-driven legal framework for the country definitely looks 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. For one, we can hope for a more equitable tax policy that can balance investor sentiments along with the government’s plans to generate revenue from the sector. The finance minister is also right about how we need a global standard on regulations, rather than each nation having separate policies. After all, the transformative potential of cryptos isn’t linked to any specific jurisdiction, but spans across the world.”
Government Stance Is Contradictory: Ajeet Khurana, founder, Reflexical Pte, a Singapore-based Web 3.0 venture capitalist company, says that 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.
“Even if it is a tech-driven regulatory framework, sooner or later, all governments will have to take an unequivocal stance on digital assets,” adds Khurana.
Edited by: Sutirtha Sanyal