The repeal of a blanket ban on cryptocurrencies in March by India’s central bank, the Reserve Bank of India, has been a boon to the thriving crypto industry in India — with the launch of new exchanges being a catalyst.
This is despite the country being one of the most severely affected nations by the COVID-19 pandemic, which has led to a deepening economic crisis across the nation. For investors and fintech innovators alike, cryptocurrency and blockchain technology have proven to be a much-needed respite in these challenging times.
Repealing the blanket ban was not the ultimate solution that most had hoped it to be, as even after the repealing, there have been incidences of banks declining to process crypto transactions. However, there is more regulatory clarity in the industry now than there was back in 2017 when the degree of skepticism and confusion was at a high level.
A rumor of a note that was moved within the Ministry of Finance for intradepartmental consultation regarding a draft law that sought to ban all cryptocurrency-related activity — with a heavy fine or even a jail term of up to 10 years for offenders — had been swirling around, but it has recently been debunked. Corporate advisory firm AKM Global said that if the law gets passed in its current form, it “would completely decimate the crypto-industry in India.” This rumor brought back fears to the crypto community. However, Nischal Shetty, the CEO of crypto exchange WazirX, maintains faith in the government, telling Cointelegraph in an email exchange:
“On the day the news about the ‘note’ broke out, it created some panic among the community. But that’s all. We are not seeing any difference in the trading behaviour on WazirX since then. There have been speculations about crypto ban in the past as well. With more than 5 million crypto users in India, I’m confident that our Prime Minister won’t let us down.”
This positive outlook about the governing bodies is not shared by all experts in the industry. Siddharth Sogani, the founder of Crebaco — a research, rating and intel company for blockchain — fears the inadequate dissemination of knowledge within the governing bodies and iterates the need for a separate committee:
“Our government released the draft bill on crypto which was made by interns of National Institute of Financial Policy and Planning, without consulting even one industry or subject matter expert. There are several aspects to be taken care of while making policies in India. […] A dedicated government body should be there which regulates this industry, without that it is impossible to regulate crypto in India.”
Reluctance by banks
In addition to the RBI, a few private banks have been reluctant to process crypto transactions for various firms in the industry. However, there is wide speculation as to why that is; it could just be a lack of understanding and knowledge of the industry as was seen with governing bodies….