The Indian Parliamentary Standing Committee on Finance held its first-ever meeting on cryptocurrency and resolved that cryptocurrencies need not be banned in the country but regulated. However, they did not come clear on which authority should be mandated to regulate digital currencies.
The panel, which is chaired by BJP MP Jayant Sinha, heard and received various submissions from different stakeholders in the crypto industry including Indian crypto exchanges, academicians from the Indian Institute of Management (IIM) Ahmedabad, and Blockchain and Crypto Assets Council (BACC).
“We heard from them about their views on the right regulatory framework for this industry as it continues to develop and evolve. The idea was to listen to their perspective,” said Jayant Sinha.
During the meeting, the members of the parliamentary committee warned that some cryptocurrency projects in the country were starting to look like Ponzi schemes in the way that they advertised their businesses and lured users. They said this must not be so.
They however agreed that a total ban would not favor the blossoming crypto industry in the country, given that it was already attracting many investors.
Panel members mentioned issues of protecting investor funds which necessitated regulating digital assets in the country. Together with industry representatives, they agreed that regulation would protect users and prevent unregulated crypto activity and its use in crime.
One panel member took issue with misleading crypto advertisements which he said lures young people to invest their money unwisely. He showed a full-page ad of a crypto exchange on a national daily.
It is expected that a regulation will be put in place through an industry-wide consultative process to curb the usage of cryptocurrencies in money laundering, scams, and terror financing in India. The meeting comes after Prime Minister Narendra Modi on Saturday held a meeting to discuss these matters. The upcoming regulation is also expected to tackle misleading advertisements about cryptocurrencies.
Despite India having a strong and burgeoning crypto industry now with at least three crypto unicorns namely CoinSwitch, Kuber, and CoinDCX, the Reserve Bank of India has not been so soft on digital currency banking and financing in the country.
Crypto-related banking activity has been hugely contentious in the country since 2019 when RBI banned banks from offering crypto-related accounts and services to crypto companies, and the subsequent rejection of this position by the Supreme Court in 2020 through a court process. Thus a regulation that is based on a widely consultative process will score a huge first for the industry.
Among industry representatives who attended include Naveen Surya, the Chairman of Fintech Convergence Council, Ashish Singhal who is the CEO of Coinswitch Kuber, and Sumit Gupta CEO of CoinDCX.
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