India’s finance minister has broken silence and talked about the crypto draft bill and report her department is examining which propose to ban cryptocurrencies. While she views the report as “very futuristic and well-thought-out,” the crypto industry sees it as flawed and incomplete.
Finance Minister Talks About Crypto Report
The Indian finance and corporate affairs minister, Nirmala Sitharaman, talked about the cryptocurrency report and draft bill her ministry is examining in an interview published by The Economic Times on July 29. The report, which contains a draft bill entitled Banning of Cryptocurrency and Regulation of Official Digital Currency Bill 2019, was made public on July 22. It was submitted by the interministerial committee constituted on Nov. 2, 2017, to study all aspects of cryptocurrency and provide recommendations. The committee has recommended a ban on all “private cryptocurrencies.”
The finance minister was asked during the interview: “When are you proposing to take the legislation to [the] cabinet?” She replied: “I had the presentation done before me. The committee has done extensive work on it. Inputs that have come in; if I compare several other countries where this kind of study has been done on cryptocurrencies, we have done very well.” Sitharaman continued:
“They have gone much ahead of all other countries that have thought about it. It’s a very futuristic and well-thought-out report. I have not spent time on it after the presentation. Of course, we will look into it soon and come back with a position. That was also reported in court as there is a case going on” .
Several crypto-related writ repetitions are pending at the Supreme Court of India which was scheduled to hear them all on July 23 after repeated delays since last year. At press time, the court still has not heard the case. Some petitions challenge the banking restriction imposed by the Reserve Bank of India (RBI). The central bank issued a circular in April last year banning regulated financial institutions from providing services to crypto businesses. The court has also asked the government to submit the interministerial committee’s crypto report.
Finance Minister ‘Misinformed’
Varun Sethi, founder of Blockchain Lawyer, shared some thoughts about the finance minister’s reply to The Economic Times. The “finance minister has apparently not stated anything negative,” he said. Since her position “falls under the Ministry of Finance, under whom the Department of Economic Affairs also falls, so ideally the report is made under her ministry only,” Sethi added. Noting that the chances of her “commenting publicly against the report don’t stand,” he opined:
There is surely no doubt that Indian report is rather comprehensive however she has reserved her comments about her thoughts post the issuance of report, thereby the reactions by the community are yet to be captured.
Responding to the finance minister’s comments, Nischal Shetty, CEO of local crypto exchange Wazirx, tweeted to Anurag Singh Thakur, Minister of State for Finance and Corporate Affairs. “Misinformation about crypto has reached our FM due to the flawed crypto report. Ban is never a futuristic solution to anything. Report does not even classify crypto correctly. Please give the crypto industry an opportunity to represent,” he emphasized. Shetty continues: “This is probably the first time she’s spoken about crypto. It’s a start and while her comment is from only one side, the flawed crypto report, we’re hopeful she gives the crypto community of India a chance to present our view of crypto.”
“I’m sure she’ll take an informed decision and change her opinion once true facts are laid down in front of her,” He believes. Convinced that the finance minister has been misinformed, the finance minister declared: “We need to campaign harder so that the right information about crypto reaches her. She’s been presented an incomplete idea of crypto.”
The Wazirx CEO has been running a social media campaign calling for the Indian government to introduce positive crypto regulation. It has been 271 days since the launch of his campaign. Ever since the interministerial committee’s report was made public, he has ramped up efforts to engage lawmakers to help them understand how flawed the report is.
Commenting on the finance minister’s view on the crypto report, Sumit Gupta, CEO of local crypto exchange Coindcx, told: “I appreciate the comment of the finance minister and I guess her understanding of the global scenario is much wider.” Noting that the finance minister participated in the recent G20 meetings, he remarked: “I believe her interaction with other finance ministers might help in drawing the midway for the crypto industry. There is always a possibility that the government may not be that harsh on cryptocurrency in order to meet global standards and stay par with the developed world as envisioned by our prime minister. Fingers crossed.”
Social media influencer for the Indian crypto community who goes by Twitter handle “Indian Cryptogirl” also shared some thoughts with news.Bitcoin.com. “I ask you, how is a report that encourages a closed private ledger and criminalizes decentralized public cryptocurrency futuristic?” she said. “India is choosing a national currency because they want money to remain within its borders and to give them control over the supply and monetary policy. This isn’t a cryptocurrency, it’s just another e-payment solution by the government which is recorded on a ledger.” She further elaborated:
In her closing remarks, she said that she will be looking at it again and come to a position. This is why the Indian community is coming together and appealing to national leaders in full force.
Both Sitharaman and Thakur have indicated that they are listening to the community. Sitharaman tweeted in June: “Grateful for every thought/idea that’s being shared by scholars, economists and enthusiasts through print, electronic, and on social media. I read many of them; also, my team carefully collates them for me. Value every bit. Thanks. Please keep them coming.”
As for Thakur, he tweeted on July 26: “I have an open glass door policy. We will continue to have a multi-stakeholder approach to policymaking. I am extremely clear and committed towards this as a minister” (in Prime Minister Narendra Modi’s government). Thakur recently confirmed in Rajya Sabha, the upper house of India’s parliament, that the government has not banned cryptocurrency in the country.
Industry Body’s Suggestions
The Indian National Association of Software and Services Companies (Nasscom) is a non-profit information technology industry association self-described as “the apex body for the 154 billion dollar IT BPM industry in India. Among its initiatives, the group “Liaisons with government and industry to influence a favourable policy framework,” its website states.
The association said Tuesday that, instead of banning, the government should “work towards developing a risk-based framework to regulate and monitor cryptocurrencies and tokens,” Business Standard reported. This recommendation is in line with the recently issued crypto guidance by the financial action task force (FATF). Nasscom detailed:
A ban would inhibit new applications and solutions from being deployed and would discourage tech startups. It would handicap India from participating in new use cases that cryptocurrencies and tokens offer.
The association believes that “a ban is more likely to deter only the legitimate operators as they have no intent to be non-compliant,” the news outlet conveyed.
To address consumer protection concerns, cryptocurrency-based businesses can be tested in the regulatory sandboxes being launched by the financial sector regulators across the country,” Nasscom recommends. “We should work towards creating a regulatory framework that will constantly monitor and prevent illegal activities. Regulating would allow the law enforcement agencies to be better equipped to understand these new technologies, enable them to gather intelligence on criminal developments and take enforcement actions.”
This is not the first time Nasscom has spoken in favor of regulating crypto assets. In February, it released a report calling for regulatory certainty, particularly in areas such as cryptocurrency.
The report containing the bill to ban cryptocurrencies is dated Feb. 28 even though it was made public on July 22. The interministerial committee drafted the report under the chairmanship of former Secretary of the Department of Economic Affairs (DEA) Subhash Chandra Garg. The “Committee is very receptive and supportive of distributed ledger technologies and recommends its widespread use in delivering financial services … Private cryptocurrencies are of no real value. Rightly banned,” he tweeted following the public release of the report.
Three days later, Garg announced that he is no longer the DEA Secretary, due to Prime Minister Narendra Modi reshuffling his top-level bureaucrats. Garg has been moved to the Power Ministry.