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What's the problem with Cyrptocurrency Bill? Industry insiders explain

Avneet Kaur     March 4, 2021

The proposed bill to ban cryptocurrency in India has caused great confusion among cryptocurrency players. While it has spooked existing Bitcoin and other crypto investors, it is also keeping prospective investors at bay. However, some crypto experts see a silver lining. They say at least the government has finally started discussing cryptocurrency.

"I look at this whole development as more of a positive direction for the crypto sector in India. The reason being that before this we had no understanding of what the Government was thinking, and if the Government was even thinking of cryptocurrency as a sector in India," says Nischal Shetty, founder, CEO, WazirX.

Cryptocurrencies are usually classified into four categories - currency, commodity, utility or security. But the cryptocurrency bill of 2019 referred to Bitcoin more as a currency and not in any other form or as an asset class. That is where the problem lies, say industry experts.

"I don't think any other crypto should be allowed to compete with the INR. But, the part which has been really left out, and where all the confusion is, and the reason why we all are fighting for regulation is the fact that it should be allowed as an asset class," says Shetty.

Just like an investor likes to keep some part of his portfolio in gold for diversification, keeping some part say five to 10 per cent of an investor's portfolio or higher in a Bitcoin or some other cypto should not be a problem. Just like any other asset class, it will serve the purpose of diversification, the industry experts opine.

Cryptocurrency players believe there is a communication gap between the Government and them. The industry participants say none of them have been approached for suggestions.

"There's not much dialogue that happened between the industry and the regulators (Government). This area may be a very small thing for the Government at the moment so whenever we try to do a discussion, it does not materialise," says Sumit Gupta, Co-founder, CEO, CoinDCX.

"None of us in the industry have been approached for a presentation or suggestions by the Government while drafting the bill," says Shetty.

However, the industry is growing rapidly and it does not look like a very small segment anymore. According to Sumit Gupta, currently there are close to 75 lakh crypto investors in India.

A crypto bill is incomplete without industry participation, according to industry players. They say they know the ground realities that should be considered before deciding the fate of the crypto sector in the country.

"Currently, the whole aspect of the bill comes only from theoretical knowledge of those involved, not practical because, only the industry has practical knowledge, the ones who have been working. We have got our hands dirty in this technology to build it. Discussions with the industry are crucial to have a combination of practical and theoretical expertise," says Shetty. Once the two mix, we will get into the middle path which is regulation of cryptocurrency, he adds.

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