India: Calls for crypto regulations intensify ahead of Budget Session 2022

India’s digital payment system and financial services company, Paytm, had previously stated that it might dive into crypto once the regulatory environment becomes favorable. Now, with the Indian Budget session coming up, CEO Vijay Shekhar Sharma has spoken in favor of implementing regulations. He told ET, 

“No technology should be blocked. Technology should be shaped and given an opportunity.”

He further explained that blocking anything will lead to illegal markets for the asset, considering  “this is too large technology to be paused.” India was rumored to be on the way to ban all private cryptocurrencies just last year. However, it has come a long way since then as the country might soon get its first Bitcoin and Ethereum-based Futures ETF launching in the market, as per local reports.

Having said that Paytm is a major player in the Indian market, and crypto offerings could become a major part of its product space. Madhur Deora, the company’s Chief Financial Officer, had previously commented,

“…if [Bitcoin] was ever to become fully legal in the country, then clearly there could be offerings we could launch.”

Therefore, Sharma’s call for regulations could again hint at the future that the company is betting on. He said,

“I would rather expect regulators and governments to come together to structure it and say that this is what we allow.”  

However, interestingly, he believes that it’s not an asset class for common people due to its high-risk profile. But, he appreciated the homegrown projects in the crypto space. 

“I’m so proud that we have a company like Polygon.”

Crypto framework

That being said, concerning the regulatory framework, Former Finance Secretary Subhash Chandra Garg suggested three different laws to regulate cryptos in India. 

His suggestions largely pertain to guidance around digital currencies, crypto businesses, and crypto-assets. He told the local media, 

“I think it will make sense to bring a financial crypto assets kind of law, most probably by a separate regulator to regulate the entire digital assets of the crypto world…”

It is worth noting that while the crypto bill didn’t make it to Parliament’s table last year, it is expected the government might provide some guidance during the upcoming budget session at the end of this month. 

We can’t deny that India is a major player. Binance CEO Changpeng Zhao had also opined recently that India “is poised to be a leader within blockchain and crypto.” He had cited the Nasscom report which predicted that India’s crypto-tech market might hit $241 million by 2030.

But as businesses grow, Garg noted that credit is being extended on different platforms using the crypto platforms. Therefore, he advised,

“I call the crypto businesses distinguished from cryptocurrencies.”