Ahead of a crucial parliamentary standing committee meeting on cryptocurrencies, industry bodies have appealed to the government for progressive regulations which will ensure wealth creation and higher tax revenues for the exchequer.
“India has the potential to earn tax revenues of over $1 billion annually in the form of capital gains if the industry gets supportive regulation. Over a 5-year period, Indian holdings of crypto can exceed $100 billion," said an industry official.
"The committee understands this is an important and urgent topic and therefore is calling in industry stakeholders to understand what they see as opportunities and challenges for cryptofinance going forward. All key players from the industry will be there," Chairman of the Parliamentary Standing Committee on Finance Jayant Sinha told CNBC-TV18
The Union government is set to bring a bill in the winter session to regulate cryptocurrencies. On Saturday, Prime Minister Narendra Modi chaired a comprehensive meeting on the way forward for cryptocurrencies in India.
Sources said that the steps taken by the government will be progressive and forward looking but misleading advertisements need to be stopped. The Centre is also of the view that unregulated crypto markets should not be misused for money-laundering and terror-financing.
What to expect from the parliamentary standing committee meeting on cryptocurrencies?
This is the first ever meeting called by the parliamentary standing committee to seek views from industry associations and experts on the opportunities and risks in the crypto sector. Several parliamentarians have expressed concerns about potential risks to Indian investors. The committee is likely to seek views on whether regulating the sector could bring in more tax revenues. Industry experts are likely to be asked about global best practices for regulating the cryptocurrency sector.
Speaking to CNBC-TV18, BJP spokesperson Gopal Krishna Agarwal said it is high time the parliament legislates on cryptocurrencies. “We understand that ultimately cryptocurrencies are here in India and it is better it is regulated. Anything out of regulation will create a completely illegal market which is very dangerous. FM has already said that we are not going to ban cryptos but we will regulate it," said Agarwal.
He further said, “Govt is moving more and more towards digital payments. The problem is that there is no central clearing entity on crypto currencies. Therefore, there is a chance that illegal funds can creep into the sector. RBI initially had banned cryptocurrencies, but the order was struck down by Supreme Court which asked the government to first make a legislation. So it is high time parliament legislates on cryptocurrencies."
What is the industry view?
Industry associations have said that the government should create an independent regulator for the cryptofinance sector. Banning it would keep India out of global transformation, with loss of capital and labour, said a source.
According to reports, the crypto asset market in India is likely to be worth $15 billion, with over 6 million crypto users in the country. Foreign investments in cryptofinance ecosystem could go from $500 million currently to $25 billion by 2025, according to some industry sources. Experts have also said that stablecoins linked to rupee should become the only entry/exit points for crypto assets and there is a need for introducing central bank digital currencies.
Who are appearing before the committee?
Members of Blockchain and Crypto Assets Council, Indian Software Products Industry Roundtable, IIM-Ahmedabad, Khaitan & Co and other industry experts are likely to appear before the committee.
Only private sector representatives and experts have been called for the parliamentary standing committee meeting. After this first meeting, the committee will decide on next steps in the consultative process. The meeting is likely to address how innovations and opportunities in the cryptocurrency sector can be leveraged in the face of challenges such as unbridled speculation and illegal financing.