Finance Minister Nirmala Sitharaman’s recent comments on the future of cryptocurrencies in India have kept the hopes of crypto startups alive. In contrast to the government’s proposed bill in January — Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, which sought to ban all “private cryptocurrencies” in the country such as bitcoin, the minister said that the government “wants to make sure that there is a window available for all kinds of experiments which will have to take place in the crypto world.” Talking to CNBC TV18, Sitharaman had, however, noted that the government’s position on cryptocurrencies will be a “very calibrated” one.
“Finance Minister Sitharaman’s comments aren’t just encouraging for existing crypto companies like ZebPay. It signals that the door may finally be opening for large-scale innovation and job creation in crypto. As just one example, JPMorgan recently posted new blockchain jobs in their Bangalore office. If a foreign company can create blockchain jobs in Bangalore, Made-in-Bangalore and Made-in-India companies can do the same a hundred times,” said Vikram Rangala, CMO, ZebPay. JPMorgan currently has 14 open blockchain job positions for the Bengaluru location and 10 for Mumbai.
Sitharaman’s remarks followed comments from Union Minister of State for Finance Anurag Thakur on Saturday. “We welcome innovation and new technology. Blockchain is a new emerging tech and cryptocurrency is a form of digital currency…We understand there is an immense interest in that but we also need to look at national security. I firmly believe that we must always evaluate explore and encourage ideas with open minds,” Thakur said during a webinar organised by Entrepreneurs Organisation – Punjab chapter.
“A calibrated regulation framework for the sector will also help India align with global practices. This regulation can be designed in a way that RBI governs the use of cryptocurrencies as a payment mechanism while the Securities and Exchange Board of India (Sebi) can monitor their use as a financial asset, which can be bought and traded on an exchange. Until now India has been behind in the cryptocurrency adoption curve vis-à-vis its counterparts like China and the rest of the world,” said Monark Modi, Founder & CEO, Bitex.
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The proposed bill’s crypto ban, nonetheless, had noted “certain exceptions to promote the underlying technology of cryptocurrency and its uses,” the legislation read as per the Lok Sabha bulletin last month for the budget session. The bill had also intended to “create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India.” Cryptocurrencies are only virtual currencies wherein encryption techniques are adopted to regulate the generation of their units and verify the transfer of funds, operating independently of a central bank.
“Mrs Sitharaman’s statement is a sign of government’s resolve to digitise India and making us Atmanirbhar…We have always reiterated the need for regulation, taxation, and transparency for our sector. As an Indian fintech firm, we are also building global-level products. We believe crypto as an asset has huge potential and if properly administered can help India earn sizeable revenue,” said Sumit Gupta, Founder and CEO, CoinDCX.
Even as the government looks open to evaluate the crypto potential, the Reserve Bank of India had last month expressed “major concerns” about cryptocurrencies. The central bank Governor Shaktikanta Das had told CNBC TV18 that RBI has “major concerns from the financial stability angle,” even as the bank is planning to launch its own digital currency. However, RBI in its booklet on payment systems released in January this year had noted that cryptocurrencies have gained popularity in recent years. “Nevertheless, RBI is exploring the possibility as to whether there is a need for a digital version of fiat currency and in case there is, then how to operationalise it.”