Indian Trade Association Calls for Fast Crypto Regulation to Drive Growth
The Indian National Association of Software and Services Companies (Nasscom) has released a report that calls for regulatory certainty, particularly in areas such as cryptocurrency. The lack of legal clarity and the crypto banking ban have hindered investments in this sector, hurt crypto exchanges, and driven investors out of the country, according to the association.
At Nasscom’s flagship Technology and Leadership Forum held from Feb. 20-22 in Mumbai, Vice President Sangeeta Gupta unveiled key highlights from a report jointly developed by Nasscom and management consulting firm Avasant. It details the current state of India’s
blockchain industry, including cryptocurrency.
Asserting the “Need for regulatory certainty” for the blockchain and cryptocurrency industry, the report suggests that “A proactive, consultative and defined regulatory approach to blockchain will boost the blockchain ecosystem growth in the country,” noting:
Industry participants in India are constrained due to the cautious regulatory approach taken with respect to specific elements of blockchain, such as cryptocurrency and digital assets.
Nasscom is a non-profit Information Technology industry association which describes itself as “the apex body for the 154 billion dollar IT BPM industry in India, an industry that has made a phenomenal contribution to India’s GDP, exports, employment, infrastructure and global visibility.” Among Nasscom’s initiatives listed on its website is “Liaisons with government and industry to influence a favourable policy framework.”
The association’s report emphasizes:
India needs to act fast and work consultatively with the key stakeholders in the
crypto/blockchain community and provide regulatory certainty and clarity around blockchain technology (specifically around cryptocurrencies and digital tokens).
Despite VC investments pouring into the blockchain ecosystem globally, India has seen less than 0.2 percent of global investments, Nasscom detailed.
“Investment through VC firms or ICOs in the blockchain ecosystem in India has been considerably low (totaling to USD 8.5M) due to the uncertain policy and regulatory environment in the country,” the report claims, elaborating:
Some of the initial, sizeable investments in India were on crypto exchanges such as Unocoin and Zebpay, which have now disabled
trading through fiat currency due to an RBI directive … A restrictive regulatory environment in India is limiting the investment opportunities from both domestic and global investors into Indian start-ups.
In addition, the report notes that the lack of regulatory certainly has driven India-based investors and startups to establish operations overseas in countries such as Malta, Singapore, the U.K., and Switzerland “to limit their exposure to regulatory risk associated with the use of digital tokens or assets in India.”
While the Indian government has a favorable view of blockchain technology and is even considering introducing a national digital currency, the report describes that it has been “hawkish on cryptocurrencies.”
Citing that there is “No explicit legal framework around ICOs or digital tokens/crypto-assets,” coupled with the government not considering cryptocurrency legal tender and the banking ban by the central bank, the Nasscom report concludes:
While there is no formal regulatory framework governing crypto exchanges, preventing access to formal banking channels has led to the shutdown of prominent crypto exchanges in India.