Govt looking at regulating cryptos, blanket ban unlikely: Giottus CEO

What is your initial impression of the Bill that is going to be tabled in the Parliament soon?

There had been a lot of commotion on the list of things that are going to be discussed on the Parliament and this point has come in. If you notice, this is the same wording that has been listed in February for the next session. From that time till now, a lot of things have changed. The government has discussed in detail with the players about the industry a week back. The sense we are getting is the government is looking at how to regulate it from the point of view of two things. First is customer protection and the second thing is AML (anti money laundering) and CFT (countering terrorism financing). We get the feelers that these are the two things the government is looking at regulations. Countries like Singapore, Australia (which have regulated crypto) have targeted these two things. So, our understanding is that the government will come out with extensive guidelines on these two aspects. Banning will resolve no purpose as it can create a parallel economy, which has already been flagged up by many international organisations. Larger developed economies like US, UK, Australia have not banned it, but regulated this space. Because, banning it will be tougher. And the government has to spend a lot more on technology to oversee such transactions.

You expect no blanket ban on cryptocurrencies. You only expect strong guidelines?

Yes, that is what we are expecting. All the exchanges are already implementing the Transaction Monitoring System. So, we are expecting regulations rather than a blanket ban. I don't think, the government is going that way.

How do you interpret the public and private currencies? Will you throw some light on this aspect?

From 2019, when the wording has come up, a lot has happened. So, the words and phrases that have been given then, I don't think that is the case now. In technology parlance, all the cryptocurrencies are considered as public currencies. In that way, the terms are very ambiguous. When the regulations come up, we will know the definitions. The first thing, we are expecting is the definition of cryptos in the form of categories.

RBI is planning to bring its own digital currency. How do you see this currency with cryptocurrency ecosystem?

If the RBI comes up with own digital currency, this will be one of the beautiful interventions. Because the advantages of having a currency on a blockchain are many. One of the simple examples is that if the RBI issues a digital currency, it will stop all leakages on the public distribution system. This is because all the data bases will be on blockchain and if anybody wants to tamper that, everybody on the chain will know that. But imagine a case where you only use one app in your mobile for everything. That is not possible as every app tries to solve a particular problem. In that way, the sovereign-backed currency can solve a set of problems but not all problems. It will be better if all the best minds of the world tries to create the ecosystem for solving many problems.

How is the sentiment among investors in your exchange after the news flow suggesting a possible ban on the cryptocurrencies? Are you taking any steps to assuage investors' concerns?

There is a lot of panic. Usually, prices in India have premium over the world because of higher demand. But premiums became negative after the news came out. A lot of people were worried about what is going to happen to their investment and they started panic selling. We did our best to educate the investors and assuage the nerves. After the news came out quoting official sources that this space is going to be regulated not banned, the panic started to settle down. I also took a lot of questions from investors to cool down their concerns.

There are a lot of genuine concerns regarding outflow of money from India which the regulator may not be able to track. How do you address those concerns?

The biggest worry is that crypto is flowing out. Currently, when the money is going out in the form of international transfer from banks, the person has to provide reasons for the same. No one can transfer money if those criteria are not fulfilled. We are recommending similar kind of guidelines. When a customer is withdrawing, then we can ask the reasons for such transfer as per set criteria. Another way of doing is in terms of information sharing among exchanges. If there is a central watchdog in the similar lines of RBI, we can route our transactions through the regulator. This will help in knowing what transactions are flowing within India. Also, when a customer transfers the money outside, he has to give reasons for the transfer like the banking system. Like Australia, where if you want to mint a new crypto, you have to get regulator's approval. We can adopt that kind of model.