Cryptic crypto

Fear gripped Indian cryptocurrency investors as news did the rounds that the Indian government was all set to introduce the Cryptocurrency Bill in Parliament next week. The buzz has been that the Indian government will ban private cryptocurrencies with few exceptions. Even while some indulged in panic selling, there are several reasons to believe that the scaremongering may be ill-conceived.

For starters, the hard stance taken initially by the government earlier this year, has since softened. First, there was talk of a complete blanket ban on cryptocurrency, which shifted to a call to regulate the sector instead. As is with Parliamentary matters, the final bill may very well be completely different from the proposed one which currently calls for a ban on private cryptocurrencies. As experts say, there is also lack of clarity on the definition of private cryptocurrencies. There is also confirmation now that India's central bank, the Reserve Bank of India (RBI) has its own digital currency in the works. This is the greatest affirmation for the world of digital currencies. And if the government decides to ban biggie cryptos such as Bitcoin and Ethereum, it would surely raise a global stink.

Sector watchers expect greater clarity to emerge in the next few weeks, with many confessing that a ban on all private cryptocurrencies would come as a shock. The industry has been open to compliances such as linking wallets to bank accounts. Earlier in June, when certain banks cautioned customers against dealing with virtual currencies, the RBI issued a prompt clarification that its own 2018 directive can't be cited by banks since the Supreme Court had crushed the order in 2020.

The tabling of the bill, and if Parliamentary discussions happen effectively, can make way for greater transparency and accountability for the sector. Ahead of the tabling of the Bill, there was a Parliamentary panel meeting on cryptocurrency chaired by BJP MP and former Union Minister, Jayant Sinha, which was attended by various stakeholders of the Indian cryptocurrency ecosystem. The meeting was also necessitated to discuss the numerous cautionary advice issued by the RBI in the recent past. News reports quoting sources suggest that the discussions hinged towards increased regulation rather than a ban.

India has moved slowly on putting its cards on the table. In UK for instance, cryptos are not regulated but trading in it requires authorisation. US has been largely supportive of these digital assets while the European Union and France regulate as per their own norms. Cryptocurrency are not considered legal tender in Canada. For the crypto world, China has been most severe with its September announcement that such businesses are criminally prosecuted, and El Salvador the most welcoming as the first country to recognise Bitcoin as legal tender. India has hemmed and hawed but again has not said or done much. This leads me to believe that the beginning of Parliamentary discussions would bring much-needed respite to crypto aficionados who have been stuck in the elusive 'will they, won't they (ban)' stance of the government. Industry players say that demands for KYC (know your customer) compliance and taxability can be fully met that would placate the watchdogs. Crypto body, IndiaTech, for instance has urged exchanges to share data and ensure stringent adherence to KYC norms. The times are changing, and given the popularity of the digital currencies, the Indian administration would do well to imbibe new trends while putting in place adequate checks and balances.

The writer is an author and media entrepreneur. Views expressed are personal.