Govt Should Establish Regulatory Mechanism for Cryptocurrency Ecosystem: IAMAI

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India’s leading Cryptocurrency players, represented by IAMAI (Internet and Mobile Association of India) welcomed the Finance Minister Ms Nirmala Sitharaman’s comments that the government will take a “calibrated” approach to crypto trading and “negotiations and discussions” are going on with the Reserve Bank of India (RBI) on how to regulate cryptocurrency in India.

Appreciating the positive development, IAMAI today appealed to the Government of India not to ban cryptocurrency, proposing to develop robust mechanisms to regulate the ecosystem. Cryptocurrency has been generating jobs across a variety of functions — legal, compliance, tech, marketing, business development, finance, etc. — in India and abroad. Given the scale and diversity, the good governance and regulation of the cryptocurrency ecosystem in India is critical and will give impetus to Government of India’s Digital India vision.

India is also witnessing considerable rise in digital assets. According to IAMAI, “The crypto community consists of over 10 Million crypto holders holding over $1 Billion worth crypto assets, 300+ startups generating tens of thousands of jobs and hundreds of millions of dollars in revenue and taxes. There’s a daily trading volume of $350 Million – $500 Million.” Therefore, IAMAI said, “The proposed move to ban will have an adverse impact and will lead to loss in investments and hit 10 million Indian crypto customers. Hence, we are urging the government to define the cryptocurrency regulation framework after due consultation with IAMAI and stakeholders such as India crypto-asset user groups and the exchanges that facilitate buying and selling.” 

The Government of India has listed the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 for introduction, consideration and passing in the current session of Parliament. Under the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, reports indicate that India probably aims to launch its own digital currency i.e. Central Bank Digital Currency (CBDC). This measure will be in line with many central banks which have begun planning to issue their own digital currencies.

Drawing attention to established cryptocurrency regulatory frameworks from developed economies, Mr Nishith Desai, Founder, Nishith Desai Associates mentioned that “US, Japan and other developed countries have a positive outlook towards crypto and are considering setting up of regulations for crypto”. Mr. Desai further added “India should develop balanced and positive crypto regulations that will both ensure consumer protection as well as lead to more startups building in blockchain, more jobs, wealth creation for investors, and more tax revenue for the government. All types of crypto-asset activity should be encouraged, both government and private. We’re confident that our government will take notice of this technology and its potential to contribute to our $5 Trillion economy vision.”

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