India: Why regulations might have to wait until a formal ‘understanding’ of crypto
Over the past few days, India has maintained a spotlight on the crypto-market. In fact, the government also concluded its first stakeholders meeting yesterday with more regulatory clarity expected in the coming days. During the meeting, there was a ‘consensus‘ that “cryptocurrency can’t be stopped, but it must be regulated.”
Jayant Sinha, Chair of the Parliamentary Standing Committee on “CryptoFinance.” commented in a recent interview with CNBC TV18 that a “regulatory framework is in consideration.”
However, it is worth noting that sources had pointed out that industry associations and stakeholders are currently “not clear as to who should be the regulator.”
First stakeholders meeting
In the context of the meeting, Jayant Sinha explained that the committee is yet to take a view on the matter as,
“…the committee wanted to understand what was happening in the industry, the industry has attracted significant attention.”
However, he personally believes,
“It is very important to balance innovation and regulation.”
In this regard, SC Garg, Former Finance Secretary, holds a somewhat contrary view. In the past, he has commented,
“Whenever you talk about regulating something, we need to figure out what are we regulating.”
Garg explained that cryptos are not something “which we have really figured out.” He added,
“You can’t bring a separate law for only the crypto exchanges and not for the crypto as the asset or the product.”
While Sinha agreed that there are very powerful use cases for distributed ledger technology, Garg wants the regulators to first figure out if crypto should be treated as a currency, commodity, service, platform, or asset.
In this context, Sinha also acknowledged that they have to “understand the different ways in which market participants want to use crypto.”
On the taxation front, Sinha commented,
“Today’s taxation framework is very capable of handling crypto tokens and crypto finance.”
While harnessing the power of crypto, the Chair asserted that it wants to balance out the potential risks. According to Sinha, this might also be an opportunity for India,
“The opportunity for us in India is that we are a leader globally on financial regulation…”
While the committee is being mindful of an upcoming framework, one expected to be tabled in December, we need to take note of another ‘leader.’
Taiwan also lacked any specific virtual currency guidelines for the longest time. But, it has been tightening its hold lately.
Remarkably, Taiwan has not only formally defined crypto now, but it has also set up a regulatory supervisor for the industry. Something that India will have to do soon enough as well, in order to lead the way as it hopes to.