The cryptocurrency in India was banned by the Reserve Bank of India(RBI) from April 2018. With no doubt, the ban largely affected the cryptocurrency and activities related to it on a large scale. However, on March 4th, the ban was lifted by the Supreme Court making the transaction open and legal.
Surely, the lifting of the ban is good news to the investors as well as the exchanges as it gives them both a new hope again.
But the question here is, will this work in favor of both?
In order to know, the views of three cryptocurrency experts were taken by Moneycontrol.
Mukul Shrivastava, Partner, Forensic and Integrity Services, Ernst & Young
According to Shrivastava, it is a mixed bag of rewards and risks. Investors having expertise in the field search for benefits by following technological advances. He said that it is equally important to have the necessary qualification and education and be aware of it all in terms of an economy, a crypto-exchange, a trader or a consumer – to build a broader ecosystem where innovation is expected, and threats are mitigated.
Cryptocurrencies gained acceptability, but they need to be seen as a double-edged sword in today’s probable, risky environment. For instance, there is no central authority to regulate, take ownership or provide security to safeguard crypto assets.
The use and making transactions on a real-time basis are easy with no cross-border limitations. Anonymity is offered, but there is virtually no know-your-customer (KYC) requirement, which makes it worrisome keeping in mind the traceability. One of the major issues is that crypto accounts can be used for purposes that are forbidden by the law which are impossible to track. This makes it a concern. The creation of a crypto wallet requires an internet-enabled device. With limited information technology literacy, this can expose users to high-risk situations and make them potential targets for cybercriminals. The use of cryptocurrencies once again will depend on how the ecosystem can grow while mitigating risks.
Nischal Shetty, Founder & CEO, WazirX
There is a need to initiate dialogue with the Indian policymakers and regulators and work towards creating a crypto regulatory framework in India says, Shetty.
Some time ago, South Korea legalized cryptocurrency while cryptocurrency has a positive response from other countries like Australia and Japan too. Those are not the only countries however and many others are using cryptocurrency. The main thing here is that all countries making use of cryptocurrency have made sure to set up regulations for it. If India successfully regulates cryptocurrency, it will be a positive aspect as doing so will lead to more blockchain-focused startups, more jobs, and more tax revenue for the government.
Crypto is a new age asset and should be not treated like any other random traditional asset.
Currency is just one of the many possible use-cases of crypto. Moreover, the financial action task force (FATF) guidelines clearly state that crypto is not a threat to the global economy, and can be regulated properly. FATF has, in fact, even submitted a crypto standard regulation report to G20 countries, and India is a G20 member. Both crypto and fiat can co-exist and, in fact, crypto can help banks solve the existing problems for millions of unbanked people. A peer to peer (P2P) platform was being used by Indians due to the note ban. However, the banking channel was more successful due to its convenience. Similarly, if Indians start dealing in terms of crypto, it will be an easier option.
Dr Garrick Hileman, Head of Research at Blockchain.com
Hileman stated that the use of cryptocurrency will serve as a foundation for users to be their own banks especially with the trending financial services
Since a long time now, experts have predicted and believed India to be one of the leading countries in terms of adopting and using cryptocurrency and digital assets especially as the economy is on the verge of shifting to cashless. With the Supreme Court’s decision a path was created to stabilise and support the investors as well the exchanges that provide them.
Since cryptocurrency is a digital currency that runs on blockchain technology, not only will it increase the use but also make use of new ideas and talents which will be a boon to the blockchain and distributed ledger technology initiatives of India.
Countries that encourage public cryptocurrencies will attract talent and generate domestic technology advantages that will help them win the blockchain technology race. A recent example of this occurred in China, which partially relaxed regulations around cryptocurrency mining following President Xi’s speech announcing blockchain technology as a national priority.
India has developed a strong position in developing next-generation blockchain and distributed ledger technologies, and this combination of talent and enhanced regulatory clarity together will only help Indian firms develop regional and global leadership positions.