The regulation of cryptocurrencies is finding a host of enthusiastic supporters around the world, while in India it seems to be a real headache. Even though the Indian government appears to have made a decision on cryptocurrency taxation, it is still struggling to come up with policy for the sector.
Furthermore, in recent times the cryptocurrency sector in the country is rapidly gaining popularity, especially among young people. For example, India will be one of the fastest growing cryptocurrency markets in the world, with a 641% increase between July 2020 and June 2021, according to a report from Chainalysis.
Is regulation necessary?
CoinSwitch CEO asks for clarity on cryptocurrency regulation
Several operators in the cryptocurrency industry in India have asked the government to clarify the regulation of cryptocurrencies. The Supreme Court of India also recently asked the Center to take a clear position on the legality of bitcoin (quotation BTC).
In this context, the head of CoinSwitch, the main Indian app for cryptocurrencies, Ashish Singhal, on Sunday asked for "peace and certainty" at the regulatory level. He said this could resolve the current uncertainty and safeguard cryptocurrency investors.
Speaking at the World Economic Forum in Davos, he expressed concern that cryptocurrency holders in India face many uncertainties. He told Reuters:
"Users don't know what's going to happen with their holdings - will the government ban, it won't ban, how will it be regulated?"
In addition, he stressed the importance of regulation. Singhal noted that:
"The regulations will bring peace and greater certainty."
CoinSwitch, which recently delisted the TerraUST and LUNA stablecoins after the collapse of the Terra network, boasts a market cap of $ 1,9 billion and over 18 million users. The Bengaluru-based company is backed by A16Z, Tiger Global, and Coinbase Ventures.
However, CoinSwitch, along with other leading exchanges, has disabled rupee deposits, making it more difficult for users to do.
Addressing regulatory gaps
According to Singhal, the "clarity" of cryptocurrency regulations could offer guarantees to holders and boost the country's cryptocurrency sector.
Singhal noted that recent tax changes, new cryptocurrency advertising guidelines, and the recent restriction on celebrity endorsements still represent significant work to streamline the industry.
The global cryptocurrency exchange Coinbase was launched in India in April. A few weeks after launch, it stopped using an Interbank Funds Transfer (UPI) service. The chief executive of the exchange recently cited pressure from the Reserve Bank of India and the government to shut down the UPI payment service.
Singhal said authorities are concerned about bad actors given the decentralized nature of digital assets. Additionally, the central bank supported the cryptocurrency ban, citing financial instability. The RBI fears that cryptocurrencies could lead to the "dollarization" of an economy.
“We are pushing for regulation. With the right regulation, we can clarify ”.