Regulating cryptocurrency need of the hour in India
Experts back cryptocurrency.
Ban on private crypto assets would result in revenue loss
Might force industries to operate illegally
Need to address policy concerns of crypto
Safe harbor protection from liability for the actions of investors
Sebi, RBI, and Finance Ministry must share responsibility for oversight
Mumbai: India must regulate cryptocurrencies in consumer interest and promote innovation. Crypto assets likely to form basis of future forms of internet, India well placed to capitalize due to burgeoning private crypto market, says a study titled The Regulating Crypto Assets in India. The Indian Crypto asset industry has witnessed exponential growth over the last five years. Analysts suggest that more than 15 million Indians now hold digital currencies. As a result, cryptocurrencies, like any other financial asset, need to be regulated to both protect consumer welfare as well as promote innovation. This is the key finding of Regulating Crypto Assets in India, a report jointly published by the Esya Centre and Observer Research Foundation (ORF), two New Delhi-based policy think tanks.
The report is a first of its kind deep-dive into the world of cryptocurrency in India, one of the fastest growing globally, and comes at a time when New Delhi aims to introduce a bill to regulate the asset.
The report highlights that crypto-assets are likely to form the basis for future forms of the internet and that India is well placed to capitalise on this due to its burgeoning private crypto market. Given this, it would be unwise to place a ban on private crypto assets as these can result in significant revenue loss to the government and force nascent industries to operate illegally.
Instead, the report advocates a balanced regulatory approach that addresses concerns of fiscal stability, money laundering, investor protection and regulatory certainty while preserving innovation. According to one of the authors, Meghna Bal, the "Most regulatory formulae necessary to address the policy concerns related to crypto-assets, such as investor protection, foreign exchange management, money-laundering and tax evasion, already exist in financial legislation.