The author is CEO & Co-founder, Giottus Cryptocurrency Exchange.
The panic in the market today has been caused by the description of the crypto bill which has been unchanged from January 2021. The description doesn’t seem in line with the Government's recent official statements, activities and thereby could simply be an overlooked aspect of the document. We request you all to stay calm till the bill is presented to the Parliament and is available for review in the public domain before taking any serious decision.
The past 24 hours have been eventful for the Indian cryptocurrency ecosystem. As investors reacted to unconfirmed reports of a possible ban on cryptocurrencies in India, we saw a 15-20% drop in prices of Bitcoin and other cryptocurrencies among Indian exchanges. This meant that many new age crypto investors have panic-sold their positions at a loss because of fear and uncertainty in the market with respect to regulations. In this article, I will argue why such a ban is unlikely and what you can look forward to with respect to regulations in the country.
All over the world, cryptocurrencies have been met with skepticism and criticism for years from various government bodies. While the lawmakers are right in pointing out certain bad actors who adopt this, the real difficulty however lies in the understanding of cryptocurrencies in general and on how to weave them into the existing legal framework.
According to a bulletin posted on the Indian Parliament’s official website and among the bills that are submitted for consideration during the winter session of the Parliament, “The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021” is also present. The bill aims to create an official digital currency which will be issued by the Reserve Bank of India (RBI). It also mentions that the bill seeks to ban all private cryptocurrencies while allowing some of the underlying technology of cryptocurrencies and its uses.
While the content of this draft remained the same from the January 2021 draft bill, as soon as the word got out, there was widespread panic selling among the Indian investors and traders. The selloff was evident as prices of few cryptocurrencies on major Indian exchanges sharply declined by more than 15%. It is pertinent to note that this did not affect the international markets.
Ever since the last January draft bill was deferred for more consultations, a lot of worthy developments had taken place. Few months ago, the Indian finance minister Nirmala Sitharaman stated clearly that a blanket ban on crypto is off the table and the government is willing to work on blockchain technology.
Earlier this month, the Indian prime minister Narendra Modi chaired a meeting on cryptocurrencies with top regulators of the country like RBI, SEBI and the finance ministry. Following that, the parliamentary standing committee on finance met with crypto industry representatives, stakeholders and experts to listen to their views and concerns on the regulations front. Given these active discussions with industry experts, there is an expectation that the new draft bill would be modified before presenting it to the Parliament.
Crypto has been life changing to many Indians. More than 15 million investors have gained from this asset class in recent years. According to Nasscom, there are more than 50,000 skilled individuals employed in the crypto assets industry and is expected to jump high in the coming months. Industry reports suggest that there are more than 1000 developers in India who are involved in building blockchain projects. There are countless traders and investors who win their bread and butter from crypto in some form or another. There are numerous startups that want to capitalise on blockchain technology and some have shown that world class projects can be built from here too. The Government recognizes the above and wants to amplify the good, punish the bad actors with the help of regulations and promote innovation.
In the unlikely scenario that there is going to be a ban, we will first need clarifications around the fine print- what is a private cryptocurrency that is supposed to be under the radar? How can a ban be enacted on them? What is the role of established Indian crypto exchanges? etc.
Till the time the actual bill is presented in Parliament, we may only be speculating given that the description of the bill matches with the January 2021 iteration though the Government's stance has changed in the interim. We request users to not panic and hold on to their assets.
Disclaimer: This article was authored by Giottus Cryptocurrency Exchange as a part of a paid partnership with The News Minute. Crypto-asset or cryptocurrency investments are subject to market risks such as volatility and have no guaranteed returns. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.