India's cryptocurrency ecosystem is in pause mode, waiting for clarity on the proposed crypto regulation bill. The finance secretary TV Somanathan told CNBC-TV18 that the bill is still in the draft stage and that people are reading too much into the brief description of the bill.
In the bill
’s description, listed for introduction in parliament, the union government says, the Cryptocurrency Regulation of Official Digital Currency Bill aims to create a facilitative framework for the creation of official digital currency to be issued by RBI. It also seeks to prohibit all private cryptocurrencies in India. However, it allows for certain exemptions to promote the underlying technology of cryptocurrency and its uses.
So when asked how he would interpret what the finance secretary
said and how unusual it was for a draft bill which has not yet been finalized to be put up on the legislative agenda, R Chandrashekhar, Former Telecom Secretary, and former President, Nasscom said he as not surprised.
"... because it should have been clear to any knowledgeable observer, that the government and the RBI would never ever going to allow cryptocurrencies to become legal tender in the country because there are all sorts of issues relating to financial stability and control over the money supply etc." he said
The former president of NASSCOM said that the listing and the description has certainly set the cat among the pigeons because the way it has been interpreted by most people is that private crypto would be banned completely.
"(This) means that as a medium of exchange as a store of value, forget about legal tender, but even as an asset, which could be bought and sold, restrictions would be placed, that perhaps would be going to the other extreme."
According to Chandrashekhar, China has done that, they were reported to have lost almost USD 80 billion to cryptocurrencies from their own economy.
“The way I see it, a lot of the discussion especially in the current context when cryptocurrencies have become so ubiquitous, they have favoured allowing it as an asset, which can be bought, where the players are fully aware that there are risks involved, that the value fluctuates, it has no intrinsic value, and yet if the investment is to be made, then so be it but banning it outright might actually shutout an activity, which could turn out to be important,” he said.
The digital world is global and is not bounded by borders but laws are all applicable only within a sovereign territory.
"So, while regulating the digital space, implementing and enforceability will also have to be taken into account and if something that is implementable is passed then in effect, we will be driving this activity underground, where perhaps it will become even more difficult to regulate," Chandrashekhar added.
Therefore, stricter regulations yes but a complete ban maybe not, is how the former telecom secretary sees things progressing.
"... enabling it to be treated as an asset, ensuring that KYC norms are brought in so that you don't have anonymous people transacting unaccounted money, would be entirely understandable. But an outright ban, perhaps, maybe going a bit too far at the current moment," specified Chandrashekhar.
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