On Monday, representatives from crypto exchanges, the Blockchain and Crypto Assets Council (BACC), industry organisations, and other stakeholders testified before a parliamentary panel led by BJP leader Jayant Sinha on crypto finance.
The growth of cryptocurrencies across multiple industries continues to spill over, with the Indian gambling market one of the biggest beneficiaries. Crypto games are fast becoming mainstream, not only in India, but also across many other regions.
A general conclusion was reached during the meeting of the Parliamentary Standing Committee on Finance with business organisations and specialists on the subject of crypto finance that cryptocurrencies cannot be stopped, but there was a need for regulation.
“There was a consensus that a regulatory mechanism should be put in place to regulate cryptocurrency. Industry associations and stakeholders were not clear as to who should be the regulator,” sources told ANI.
“Largely they agreed that there cannot be a blanket ban. But many concerns were raised and everyone agreed on the need to regulate it. But there were many queries which remained unanswered. The most important was if regulated, who will be the regulator of the sector which is neither currency, nor traditional trade, not just technology. That line has to be defined. This was not conclusive and in our next meeting we will ask finance ministry officials to be present and explain some of our queries and concerns,” said a source who attended the meeting.
According to the source, the MPs biggest concern was the protection of investors' money.
According to the agency's sources, a member of parliament raised concerns over full-page crypto advertisements in national newspapers. Cryptocurrencies, according to experts, are a form of investor democracy.
Members of the Parliamentary Standing Committee on Finance now want government officials to testify before the committee and discuss these issues about crypto finance.
This is the first time the Parliamentary Standing Committee on Finance has organized a meeting on the issue.
Cryptocurrency has sparked widespread attention as well as reservations about its investment potential and risks.
The meeting of the Parliamentary Standing Committee comes only days after Prime Minister Narendra Modi convened a high-level conference on cryptocurrencies with officials from several ministries and the Reserve Bank of India.
Panel chairman Jayant Sinha had earlier stated that the debate on crypto finance would explore the potential and challenges that this rapidly expanding industry brings to regulators and policymakers.
“We have called stakeholders from across the industry including operators of major exchanges, members of CII as well as academics from the Indian Institute of Management (IIM) Ahmedabad, who have done a very thorough study on crypto finance,” said the former Minister of State for Finance.
“We will hear from them about their views on the right regulatory framework for this industry as it continues to develop and evolve.”
Some members of Congress on the panel told PTI that banning digital currencies would be difficult. The panel's overall conclusion was that crypto currencies' fungibility in the real world should be regulated, and their interaction with the real world should be controlled.
Questions were expressed, according to insiders, about advertisements made by some crypto exchanges, but the members mainly agreed that establishing a body to supervise rules was the way to go.
According to them, the goal of the conversation was to better understand the infrastructure, commercial, and economic effect of cryptocurrencies.
The RBI circular outlawing cryptocurrency was declared null and void by the Supreme Court in early March 2020.
The Supreme Court overturned an RBI circular issued on April 6, 2018, barring banks and businesses regulated by it from offering services related to virtual currencies from March 4, 2021.
Following this, the central bank established an internal panel on February 5, 2021 to recommend a framework for the central bank's digital currency.
The RBI declared its intention to create an official digital currency in response to the rise of cryptocurrencies such as Bitcoin, which the central bank has expressed worry over.
The conference took place against a backdrop of increased concern in many quarters regarding crypto currencies and the potential risks associated with trading in them, particularly given the growing interest in such assets globally. There are now no particular restrictions or outright prohibitions in place in the country regarding the usage of crypto currencies.
At a recent event, RBI Governor Shaktikanta Das stated that the central bank is wary of cryptocurrencies. “As a central banker, we have serious concerns about it and we have flagged it many times.”
The agreement at the PM-led meeting a few days ago was that the government needed to adopt a forward-thinking and progressive approach to the issue while still enforcing strict regulations.
"Today's taxation framework is very capable of handling crypto tokens and crypto finance. We have to decide on the many functions that crypto finance can fulfil, where do we bucket different aspects of crypto finance..it can serve as an asset, security, commodity, payment system. The underlying technology has many broad manifestations." Sinha told journalists after the meeting.
“Once the broad bucket under which this falls is decided, taxation would become easier.”
The panel heard from representatives of crypto exchanges, block chain and Crypto Assets Council (BACC), industry organisations, academics, and other stakeholders.