The need for crypto regulation in India
Crypto! Blockchain! Bitcoin! We’ve all heard about them. And what we’ve also possibly heard is a lot of sensationalism, scepticism, and a fair bit of resistance - and understandably so.
We've possibly read about multi-million dollar NFT sales, saw Dogecoin drama play out on Twitter, witnessed price uncertainty, saw ransomware hackers being paid off in Bitcoin, and had concern over the environmental impact of cryptocurrency mining.
“As a cryptocurrency thought leader and advisor to cryptocurrency and fintech startups, I am asked a lot of questions on crypto. I’ve noticed that a lot of these questions often have their origins in fear and ignorance - and for good reason, it is a very misunderstood innovation,” says Siddharth Menon, Co-founder and COO,.
However, behind the sensational headlines and perceived volatility, a larger movement was happening. Cryptocurrency and the blockchain that underpins it is evolving as a powerful, decentralised alternative to the dominant fiat system of money and banking. In short, crypto hasn’t had its finest moment yet.
The idea of digital currency is a very new one, and central banks around the world are still weighing in on the implications of such a technology. Nevertheless, the ambiguity around the technology points to understanding ‘the need for crypto in India’ before we move on to ‘the need for crypto regulation in India.’
Crypto: An investment alternative?
For India, blockchain, crypto, and new innovations in the fintech sector are showing that they can improve the status quo, advance the concept of digital currency, and accelerate the digital payments ecosystem.
The pandemic has magnified some of the value propositions of cryptocurrency and decentralised finance. In fact, a new report discovered that the number of people using cryptocurrencies globally has more than doubled since January, reaching 221 million last June.
“With 80 lakh users, WazirX has witnessed a massive 2,648 percent growth in user signups from Tier II and III cities in the country, observing higher participation from women from smaller towns compared to their urban counterparts. The cryptocurrency exchange has also clocked $26 billion in overall trading volume since January 2021,” said Nischal Shetty, CEO, WazirX.
Remittance is also one of the key areas where cryptocurrency benefits Indians. Every year, Indians residing overseas send billions of cash home.
India can have a clear advantage by being an early mover in the global crypto landscape. It is also well poised in terms of its tech talent pool, startup ecosystem and digital infrastructure. As a first mover in the space, India could create more jobs and have the very real chance of becoming a frontrunner among the global cryptocurrency elite. However, it all begins with a robust regulation framework. A lack of regulatory clarity can cause greater uncertainty, lesser entrepreneur and user participation, loss of tax revenue, capital and funding, and possibly a brain drain.
India should take cues from developed countries such as the US, the UK, Japan, Australia, and the EU region, etc. which are regulating crypto in a way that they foster innovation and fight crime at the same time.
“It’s a good sign and shows that our lawmakers are deliberating and understanding this technology instead of rushing into it. This is a really important bill that involves both finance and technology, and I don’t think the government will pass a bill without considering stakeholders’ views. I’m optimistic that India is going to be a part of this innovation via regulatory clarity,” says Nischal.
An advocate and advisor for crypto in India, Nischal has been running an #IndiaWantsCrypto campaign since 2018 aimed to spread awareness among the masses and urge lawmakers to introduce positive crypto regulations in India. He took this forward as an industry-wide approach instead of an organisation-wide approach. Each day, he would tweet - engaging and growing the crypto ecosystem in India by spreading the right education about crypto and his vision for making cryptocurrencies accessible in India. His efforts came to a boil when Rajeev Chandrasekhar, Minister of State for Skill Development and Entrepreneurship and Electronics and Information Technology of India, engaged with one of his tweets.
Nischal also believes that advocacy, education and collaboration are key to growing the crypto landscape in India. WazirX is also a part of the Internet & Mobile Association of India (IAMAI) and is working on a self-regulatory code of conduct for crypto businesses in India.
He opines that crypto enthusiasts should be both users and active participants in the landscape as advocates, brand ambassadors, thought leaders and mentors. “Collaboration is key to winning at scale,” he says, “not just for your own startup, but also for the ecosystem at large.”