Banks in India are treading a route different from their peers in developed economies like the US, UK and Singapore when it comes to cryptocurrencies. This is not a welcome stand for the Indian banking industry, feels Nischal Shetty, CEO of Wazir X, an Indian crypto exchange.
"No bank in India is capable crypto custody unlike banks abroad. If they don’t get into it, they might soon be seen as those offline businesses that never got into online mode," Shetty says in an interaction with Moneycontrol.
While sharing his thoughts, Shetty speaks of the impact of crypto on the banking system in India and how crypto taxation may have an influence on the banks. Excerpts from the interview:
Talking of cryptos, what do you think could be a potential threat to the banking system in India?
I see that the lack of crypto promotion is a threat to the banking system in India. If the banks also enter the crypto space, they will implement this technology and stay ahead of times. But if they don’t, their peers in other countries will become superior as they have adopted the crypto.
It is a bad strategic move by the banks to stay away from cryptos, while banks in developed nations like the US, UK and Singapore are delving deep into it. No bank in India is capable crypto custody unlike banks abroad. If they don’t get into it, they might soon be seen as those offline businesses that never got into online mode.
A lot of cyber frauds has been reported in the crypto space. Moreover, there has been a rise in digital banking frauds. Don’t you think adoption of crypto by banks may fuel such crimes?
We can’t deny the fact that a lot of bad activities can happen or will happen in crypto, like any other online banking frauds. The RBI runs campaign to create awareness regarding digital banking, similarly, there needs to awareness about crypto too. We have to be careful about the OTP in banking, similarly, in crypto, people need to be very cautious about their crypto wallet. People should not keep it in a less safe manner, like they don’t disclose banking PINs and other details easily.
Crypto is secure and safe as long as the keys are safe. It is important to educate the masses about crypto.
How is it possible to monitor crypto as it is a decentralised currency and ensure lesser frauds?
Exactly the way the government and the RBI have laid out rules and regulations to monitor the banking system. Crypto industry needs to have proper regulations in place and exercise control over it as a nation to ensure safety and security for the participants.
Trail of crypto need to be tracked. Today, once it is transferred on the block chain, you don’t know where it is gone. There are ways to solve it by tracking it. This is a very new industry, so there are many changes to be made. But it can surely be made in a way so that government can have a control over the crypto industry.
India government can make it mandatory for the exchanges to have a licence and have a registered body in the country, like the US has.
How crypto taxation can help in banking?
Crypto taxation may affect banking industry. Banking industry has been growing in terms of crypto transactions as well.
Every money transaction that take place happen through banking gateways only. So, there is always an opportunity for a lot more INR transactions. But with higher taxes, there will be lesser transactions that will affect the banking industry too.