The new Cryptocurrency Bill is scheduled to be presented in the winter session of the parliament and has evoked mixed reactions from the stakeholders in India. According to statistics, more than 10 million crypto users are from India. The clauses of the Cryptocurrency Bill reflect the confusion within the government ranks & various stakeholders of how to navigate this disruptive industry. While the government is unlikely to ban crypto from India, the crypto world expects the Bill to clarify the legality and the modes of functioning in the country.
After U-turns in the past few weeks (outright ban vs. regulation, which asset class etc.), the Bill now aims to prohibit private cryptocurrencies in India while allowing exceptions to promote the technology. This week, the Center reiterated that it seeks to regulate the crypto markets to safeguard from money laundering & terror financing. This announcement created an environment of panic selling by crypto investors in India, with a 20% crash within 24hrs.
Stakeholders remain bullish on the Indian market but are waiting for clarity on the Bill to determine their position in India. The uncertainty around “private” & “public” cryptocurrencies poses a threat for investors: if the government classifies cryptos based on ownership, all the cryptocurrencies not issued by the GOI could be identified as private and banned. Additionally, Bill’s provision that cryptocurrency might never be a legal tender in India adds to the uncertainty. The Blockchain & Crypto Assets Council has further argued that a blanket ban on cryptos would encourage non-state players, leading to zero accountability and traceability of cryptocurrencies’ origin and end usage.
India remains a massive market for technological disruptions with the demographics, market size & enhanced digital sophistication. It also remains one of the most complex markets to navigate in terms of regulatory & political risks, stakeholder analysis, local-level socio-cultural risks that need to be mitigated if ‘disruptive’ technology sectors are to find their niche.