To overcome regulatory ambiguities, protect investors and develop India’s crypto business, CoinSwitch CEO Ashish Singhal said on Sunday that India must urgently adopt rules for cryptocurrencies.
The World Economic Forum (WEF) annual meeting in Davos focused on India’s legal uncertainty over cryptocurrencies. Singhal discussed the government’s policy dilemma for the industry. interview with Reuters.
“Users don’t know what will happen to their investment,” Singhal said. “The government doesn’t know whether to outlaw it or regulate it.” He said India must pass appropriate legislation to remove ambiguity, grow its cryptocurrency business and protect investors.
Indian government in dilemma over regulation
Singhal praised the Indian government’s decision on taxation and the Indian Advertising Standards Board’s rules for the crypto sector. But he argued that more action is needed, including the passage of regulatory laws.
The Indian government’s decision on crypto regulation has been pending for a long time. Prime Minister Narendra Modi said in December that despite “serious concerns” over the RBI’s “private cryptocurrency”, these new technologies should be used to strengthen rather than destroy democracy.
The government announced twice last year that a bill to ban cryptocurrencies would be introduced. However, they postponed the plan and instead taxed the proceeds of those transactions. Many have interpreted this as a “sign of acceptance” of digital assets. In fact, Singhal believes that “regulation will bring peace…more certainly.”
However, the regulatory and tax environment has deteriorated in recent months. Crypto companies face new and increased taxes, but bank regulators have denied crypto exchanges access to an instant interbank payment system.
“We are driving regulation. With proper regulation, clarity can be achieved.”
New rule sets may include requirements for identity verification and transfer of cryptographic assets. It is also a mechanism for exchanges to track transactions and report them to the appropriate authorities if necessary.
The need for regulatory clarity
Although there are no official data on the entire cryptocurrency sector in India, CoinSwitch estimates that there are up to 20 million cryptocurrency investors in India with total assets of over $6 billion. This large market can go miles with the right set of laws.
However, exchanges often struggle to form partnerships with banks to facilitate money transfers. In April, CoinSwitch and others disabled rupee deposits through a widely-used government-backed network that surprised investors. According to Singhal, the exchange has halted so-called UPI remittances to talk to its banking partners and ensure their safety. The exchange is in talks with regulators to resume transfer services, he said.
That’s not all. Coinbase first opened in India in April, but quickly gave up using its government-backed interbank money transfer service. Coinbase CEO Brian Armstrong said in May that “informal pressure” from the central bank of India was the motive behind the move.