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The Necessity For Urgent Governmental Regulations on Crypto

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Author: Shashi Jha, Head of Compliance & Legal WazirX

Even as the Indian economy suffered from an economic crisis fueled by intermittent lockdowns due to the COVID 19 pandemic, the impact of the crypto boom was certainly felt throughout the nation. According to data from Chainalysis, India’s investments in crypto skyrocketed by 612% in a single year - from $923 million in April 2020 to over $6.6 Billion in May 2021. With over 15 million Indians trading in cryptocurrencies, it comes as no surprise that Crypto is one of the fastest-growing sectors in our country.

Despite this obvious popularity of crypto among the Indian market, the absence of regulations strikes a disappointing presence in the minds of cryptopreneurs of the nation, as the uncertainty of unfavorable outcomes looms over their head. Despite the rumors of a blanket ban being unsubstantiated, and the government seemingly relaxing its stance on crypto, the regulations should come into play to overcome these challenges.

The Necessity For Urgent Regulations

Cryptos are a result of blockchain technology, which allows anyone and everyone across the world to participate. If India chooses not to participate, we will be taking a backseat. It is becoming apparent that other countries are not going to wait around on India to come up with regulations. Whether India wants to be in this scenario or not, cryptocurrencies have created a global competition - a competition where India can’t afford to back out from.

Cryptocurrencies are often dubbed as the biggest thing since the internet, and rightly so. India is one of the countries that has benefited the most from the advent of the internet. Over the last decade or two, India had managed to grab a major chunk of the $250 billion market in the form of the ITeS sector. A major chunk of India’s progress, as an economy, can be attributed to the internet and software industry. Where do we go next? What is the next evolution after the internet or software? That’s where crypto comes in…. (The leaders) do want to support crypto and show the world that we can innovate, and regulate something innovative”

The Consequences Of Delays In Regulations

India has definitely made significant steps forward in terms of crypto regulations - as reports suggesting that the government is considering classifying Bitcoin as an asset class and that the SEBI will regulate the crypto space surfaced in early June 2021. However, these regulations need to come into effect as soon as practically possible, as further delays could lead to consequences we may not particularly desire.

Our country, being a pioneer in technology (be it ITeS, or space exploration), obviously does not want to fall behind other countries when it comes to innovation in the crypto space. With clear regulations, India will see a major boost in the economy, not only in the form of FDI but also with the employment that the crypto companies will generate. Not only would India pass on these tremendous gains, but with delayed regulations, our country faces a real possibility of losing innovative minds to other markets. A lack of positive regulations often forces entrepreneurs to bring their ideas to vision in other markets with favorable regulations. This has been true for decades. We’re already familiar with the brain drain we’ve witnessed over the past few decades in other sectors.

Moving Forward

While this piece does take a cautionary view on things, the perception surrounding cryptos has definitely evolved over the last year

To address crypto’s concerns is exactly the reason all the major players in the Indian crypto space have chosen to self-regulate and follow a code-of-conduct nevertheless as a best business practice to protect the community.

Recently, India Tech review recently came up with a five-point framework on how India could move towards regulating the crypto space. The Indian crypto scene is seeing solid growth, and the regulators are coming around to setting favorable regulations surrounding the crypto space.

We urge and believe that the government will take speedy and positive measures towards crypto regulations over the next few months as they gradually realize the beauty of this technological innovation, Crypto.

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