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‘Backtracking Never A Good Policy,’ Experts Comment As India’s Finance Minister Hints At Banning Cryptos

‘Backtracking Never A Good Policy,’ Experts Comment As India’s Finance Minister Hints At Banning Cryptos

My additional comments:

Stating this upfront is a good strategy. I believe FM Sitaraman is giving a warning to all that if cryptocurrencies become too out of hand, there is a chance to revise the regulations. I do not see this as bad backtracking. If you looked at it from FM’s perspective, if crypto becomes very successfully and they felt that the market is receptive, open and ready for this new digital currency, there might also be other possible incentives that can be introduced. Reducing from 30% to 10% is not backtracking right?

In my opinion, the revision is reasonable and it is an act to protect the India market.  The digital rupee is not an easy task for India. India is a big economy and may need to exercise more control over its currency before adopting it to its fullest scale. Potential security issues can be a problem at the start and I urge experts to look deeper into the direct and indirect costs potentially linked to the implementation so as to allow them to drive innovation to the peak.

 

‘Backtracking Never A Good Policy,’ Experts Comment As India’s Finance Minister Hints At Banning Cryptos

KEY POINTS

  • India might ban cryptos even after taxation
  • India to tax cryptos at 30%
  • Industry seeks clarity on new announcements
  • ‘Backtracking never a good policy’ says expert

Conflicting signals from the Indian government on the legitimacy of cryptocurrency has not gone down well with the industry. International Business Times spoke to several experts to gauge the sunrise sector’s mood and all of them asked for just one thing – clear directions from the top.

The federal budget for the year beginning April seemed to chart out a path when it imposed a 30% tax on cryptocurrencies. A few days later, however, Finance Minister Nirmala Sitharaman said she could still ban the cryptos later. Industry insiders believe that backtracking is not a good policy especially for a big economy like India.

In a recent interview to The Economic Times, Sitharaman said, “Banning or not banning will come subsequently when the consultations give me inputs. But would you say till then I do not even tax the huge profits being transacted? I will. Legitimate or not legitimate is a different question, taxing is completely my prerogative.”

Raj Kapoor, founder of India Blockchain Alliance and Chief Growth Officer at Chainsense, said, “Backtracking is never a good policy and I feel the statement should be viewed as a statement where we have taken a baby step forward but the steps and strides seem miles away.” Kapoor believes that the announcements made in the federal budget about cryptos have a lot of grey areas that needs to be addressed.

“When we say ‘ban’ crypto currencies what exactly do we ban? What are the permissible exemptions? Do we permit crypto currencies to make in platform payments the largest exemption issue? What is the manner you permit purchase of exempted cryptocurrencies for exempted use by sovereign currencies? Questions galore, solutions in the grey,” he told International Business Times.

Shivam Thakral, chief executive officer of Indian exchange BuyUcoin, believes that the finance minister might be referring to a “worst-case scenario like when most (Financial Action Task Force) member-countries decide to ban crypto.”

“There’s also a burgeoning concern among global regulatory watchdogs that crypto can have an adverse impact on economic stability in countries like India. We’re really optimistic that the government of India will address these concerns and bring in a strong regulatory framework to tackle all these issues to become global leaders in crypto & blockchain industry,” Thakral told International Business Times.

On the other hand, Anndy Lian, chairman of BigONE Exchange, believes that stating upfront that the government might ban cryptos later is a “good strategy.”

“I believe FM Sitaraman is giving a warning to all that if cryptocurrencies become too out of hand, there is a chance to revise the regulations. In my opinion, the revision is reasonable and it is an act to protect the Indian market,” Lian told International Business Times.

India has decided to introduce a 30% tax on cryptos and plans to work on a digital rupee backed by blockchain beginning the financial year starting April.

Sumit Gupta, co-founder and CEO of CoinDCX, said “it’s two steps forward and one step back.”

“The quantum of taxation is something that is discouraging.  Also, specific sections regarding TDS are still confusing. This might act as a dampener for greater adoption,” Gupta told International Business Times.

“We must remember this is just the beginning of the larger process of adoption, multiple discussions are needed to come up with better systems or processes. But we are very hopeful that right actions will be taken,” he said.

 

 

Original Source: https://www.ibtimes.com/backtracking-never-good-policy-experts-comment-indias-finance-minister-hints-banning-3391556

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

India Should Embrace Decentralization for the Benefit of All Its Citizens

India Should Embrace Decentralization for the Benefit of All Its Citizens

The government of India’s plans to ban cryptocurrency are the actions of a reforming administration which is struggling to understand the forces of cryptocurrency decentralization and decentralized finance (DeFi). The proposed ban by the Indian government against private cryptocurrency also needs to be put in context of the real-world politics and economic concerns driving the legislative agenda.

Back in 2016 the Prime Minister, Narendra Modi, declared that 1,000- and 500-rupee notes would no longer be valid. This meant that around 86% of currency in circulation was no longer legal tender. And in a similar fashion to today’s proposed crypto move, its set to target tax evasion, with data from 2013 showing only 1% of India’s then 1.28 billion inhabitants paid any tax. Then in 2018 the Reserve Bank of India sent shock waves through the crypto community when it announced that financial institutions were to stop doing business with retail and business crypto users. While in 2020 the Supreme Court overturned this order as in breach of the constitution’s safeguard to free trade, it’s clear the Indian Government is still very much concerned about the welfare of its citizens, particularly young people, by take control of cryptocurrencies.

The challenge is that at a time when India is seeking to boost its attractiveness for business innovation and entrepreneurship that one of the most dynamic sectors is the rapidly growing DeFi sector. Compared to neighboring economies such as Pakistan and Vietnam, DeFi in India is not only much bigger but also a more mature sector. With India’s crypto adoption ranking second in the world in the recent 2021 Global Crypto Adoption Index from Chainalysis, the report confirmed that large institutional-sized transfers above $10 million worth of cryptocurrency represent 42% of transactions sent from India-based addresses, versus 28% for Pakistan and 29% for Vietnam, with the highest rate of crypto adoption in the world. The argument from the crypto industry is that what is needed is better regulation and education to support the estimated 15-20 million crypto investors in India, who are benefiting from using cryptocurrency to send and receive money around the world, this includes young people earning money from playing blockchain-based games such as Axie Infinity.

The continued attractiveness of cryptocurrency, despite policy shifts in the last few years, derives in part from the reality of the current equity market for Indian investors. Compared to the ease of holding crypto, an equity investment is still much more bureaucratic, with a process that can reportedly take up to four days to process from start to finish. Indeed, it’s estimated that there are as many as four times more crypto investors in India compared to equity investors, suggesting that the government’s agenda would benefit from including equity market reform.

A third challenge for the Indian Government tackling cryptocurrency is the fact that an increasing numbers of IT professionals and freelancers from the fintech through to IT sector now get paid in crypto. Indeed, these crypto savvy professionals have a good selection of decentralized exchanges for their transactions, thanks to the growth of the DeFi sector. While it’s understandable that the Government wishes to roll out their own central bank digital currency (CBDC) to facilitate payments, it needs to therefore consider the needs of India’s growing crypto and blockchain business community.

With the crypto industry in India currently seeing over 100% growth month-on-month growth, these are some of the complex challenges facing the government more so than is suggested by simplistic headline on India banning crypto. As we’ve seen recently with the all too predictable ban on cryptocurrency in China, leading to a mass exodus of the highly profitable crypto mining industry to the US, Russia and Kazakhstan, there are important economic issues to consider for India in the context of a global economy, in addition longstanding concerns about tax evasion and cryptocurrency volatility.

Despite the gradual softening of the Indian government’s attitude to crypto currency since the 2018 ban the Indian Government is reminiscent of Chinese state policy, seeing the advantages of a central bank currency, and the benefits of blockchain based innovation, but without wider decentralization. So, the question remains to what degree will the Indian Government be able to seize the opportunities provided by decentralized technologies and DeFi, faced with conflicting pressures from a global economy and crypto entrepreneurs on the one hand, and a central bank looking to take control over an unregulated cash economy on the other?

For further confirmation of the power of decentralized crypto sector in a global economy still struggling to recover from COVID-19, you need look no further than the US which recently passed the much-awaited $1.2 trillion infrastructure bill into law. In crypto circles the hype around the bill’s positive features was overshadowed by its poorly worded and ambiguous sections on tax reporting provisions that apply to digital assets. Despite intense lobbying before the bill was passed, the imperatives of the US Treasury Department won the day. Now it’s left to new amendments to the law to sort out the mess. In India where policy is guided by the best of intentions to help solve the issue of a ‘volatile’ cryptocurrency market, there are also risks in undermining a successful crypto sector that is estimated to directly and indirectly employ approximately 50,000 people.

The Indian Government is at a crossroads in terms of the development of decentralized finance and the blockchain sector. It can learn from the impact of the ban in China, and the poorly worded legislation in the US, for a country competing in a global economy. There are more pragmatic approaches to crypto in smaller territories and countries such as Singapore and Switzerland worth considering. Singapore is trying to build its own crypto ecosystem by embracing crypto exchanges and startups, and I think that is a model that India could adapt to fit its specific policy needs. After all, even for Singapore it’s still a tricky balancing act to achieve, to embrace crypto, and regulate the crypto sector to protect investors and the public at large, to be a leading hub for cryptocurrencies in Southeast Asia and globally.

It remains to be seen whether the Indian Government’s approach will work in the long run, seeking to ban cryptocurrency for payments (hence the use of the term “private cryptocurrency” in the proposed legislation), while at the same time allowing for digital assets to be regulated by the Securities and Exchange Board of India. This cryptocurrency ban is at odds with the decentralized economy where crypto payments and assets go hand in hand. Ripple in the US recently brought out its vision of public and private sector working together, in a regulatory framework that is fit for purpose. In India the crypto sector also needs to recognize the need for regulation, to unlock the potential of both crypto and blockchain to power the economy, while also protecting the estimated 15 to 20 million retailer investors, and the market as a whole.

There is certainly room for optimism regarding the Indian Government’s plans for crypto regulation, drawing on the lessons from the US and China, and the successes of crypto ecosystems in Singapore and Switzerland. But this learning curve over the last year, set against the desire for tax reform in the last five years, needs to start sooner rather than later. By the nature of a decentralized economy its not one where assets and crypto currency can be easily divided. Bitcoin is largely seen as a store of value, a digital asset to rival gold. But at the same time in El Salvador its now legal tender for payments from small to large businesses, for both citizens and government. India needs to clamp down on tax evasion, but it also needs to prioritize growing an economy for all its citizens.

It’s also true that with about 190 million unbanked adults, India is second only to China for the number of people without bank accounts or a stake in the formal financial sector, according to the World Bank. Government initiatives have worked best when in collaboration with the private sector have taken on a more decentralized approach, providing services without the need for banking and service fees. In other words, there’s already a model for adoption of decentralized crypto solutions for the unbanked. With the political motivation to see cryptocurrencies as tools to help India compete in the post-pandemic global economy, it could also help lift millions of its citizens out of poverty. Let’s hope therefore that these insights help guide the final form of the new regulation, and decentralization plays its part in the heart of the world’s largest democracy. #anndyliansays

 

Original Source: https://www.securities.io/india-should-embrace-decentralization-for-the-benefit-of-all-its-citizens/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

Cryptocurrency ban in India: Government is continuing efforts to prohibit all private cryptos

Cryptocurrency ban in India: Government is continuing efforts to prohibit all private cryptos

The Indian government’s ban on private cryptocurrencies through a draft bill entitled the Cryptocurrency and Regulation of Official Digital Currency 2021 has sent shockwaves around the world.

Will this lead to a blanket ban? Could the government soften its stance amid a public backlash? Those are just two of the questions after a government bulletin surfaced indicating upcoming legislation that could prohibit people from holding, selling, mining or transferring “private cryptocurrencies” in India.

The proposed legislation aims to create a framework that would facilitate the creation of a central bank digital currency (CBDC) to be issued by the Reserve Bank of India (RBI).

The bill does leave room for interpretation. It states that the government will seek to prohibit all “private cryptocurrencies” in India, but allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.

Since the draft bill does not specify what’s meant by “private cryptocurrencies”, it’s unclear whether the proposed ban will apply to heavily traded coins like bitcoin or ether, which are not controlled or managed by any private entities.

Indian cryptocurrency ban explained: What really happened?

In terms of cryptocurrency legality in India, the government has been sitting on a crypto regulation bill for nearly three years. In February 2019, the country’s Inter-Ministerial Committee (IMC) released a report advocating for a law to ban cryptocurrencies in India, recommending that those caught carrying out any activity connected with crypto could be fined or face imprisonment for up to ten years.

The IMC cited heavy price fluctuations and pseudonymity within the crypto market as reasons for why they do not consider cryptocurrency to be legal tender. This initial draft bill, which was not passed in 2019, set the groundwork for the 2021 bill, with clear parallels between the two.

In April 2018, the Reserve Bank of India (RBI) barred banks and financial institutions from dealing with cryptocurrencies, citing concerns over consumer protection, market integrity and money laundering. However, this caused a national uproar and on 4 March 2020, the ban was set aside by the Indian Supreme Court.

India’s prime minister, Narendra Modi, hinted at crypto regulation in India during his inaugural speech at the Sydney Dialogue last week.

The politician stated that cryptocurrencies could “spoil” Indian youth because they pose serious concerns for macroeconomic and financial stability.

Will India’s cryptocurrency ban ripple overseas?

Unperturbed by both the IMC and RBI’s efforts to enact a national crypto clampdown, 32% of Indians aged between 18-24 and 29% of those aged 35-44 have invested in crypto in 2021, according to a report by Finder.

India ranks second in the Global Crypto Adoption Index, behind Vietnam but ahead of countries such as the U.S, UK and China, while large institutional sized-transfers amounting to over $10m represent 42% of crypto transactions sent from India-based addresses. The country is also seeing increased development and usage of innovative decentralised finance (DeFi) projects.

The financial landscape and cryptocurrency regulation in India could change if the draft bill comes into effect during this year’s parliamentary Winter Session, commencing on 29 November.

Its impact on investors, crypto exchanges and policymakers, as well as the wider markets, won’t be fully known until the government releases more of the bill’s details, but crypto adoption and usage could be affected in the wake of any ban.

India is the second most populous country in the world behind China, which has already issued a ban prohibiting domestic financial institutions from dealing in or using cryptocurrency. If the draft bill passes, 2.8bn people (over a third of the global population) will have no access to crypto.

Anndy Lian, chairman of BigONE Exchange and chief digital advisor for Mongolia’s national productivity agenda, believes that if India bans crypto, it could create an outflow of investments.

“Those who want to invest in crypto would still find ways to do it outside of India. The ripple effects of this will be huge,” Lian told Capital.com.
“When the news of the bill first came out, reporters were predicting that stablecoin’s like USDT could drop by 25% to nearly 60 (INR) rupees and numerous Indian exchanges have been facing withdrawal issues due to high volumes of selling.
“But during the panic, we are missing the point that many investors are also buying USDT due to the price differences, as well as moving their assets to other global exchanges. India should take inspiration from Singapore and Switzerland’s pragmatic approaches to crypto in order to remain competitive globally.”

At the moment, the draft bill only includes one short paragraph discussing the proposed cryptocurrency rules in India. The possible impact won’t be any clearer until 23 December, when the parliamentary Winter Session concludes.

But, when news of the draft bill first broke out on 24 November 2021, WazirX, the most well-known crypto exchange in India, crashed when it experienced trading delays in the app – an issue that can result from high user activity.

A looming blanket ban? The implications for crypto traders in India

There are over 13,000 cryptocurrencies, according to data from CoinMarketCap. The Cryptocurrency and Regulation of Official Digital Currency 2021 draft bill does not specify what is meant by “private cryptocurrencies”.

If the Indian government classifies cryptocurrencies on the basis of their ownership, then all cryptocurrencies not issued by the government could be banned under the bill.

One issue is that with cryptocurrencies like bitcoin anyone can see the balance and transactions of any address because all bitcoin transactions are public, traceable and permanently stored on the network.

The blockchain – a shared immutable ledger that facilitates the process of recording transactions and tracking assets – is permissionless and decentralised in nature, allowing anyone to join.

This does suggest that the term “private cryptocurrency” could be void because cryptocurrencies are public, insofar as their transactions are transparent.

The ambiguity surrounding the possibility of a blanket Indian crypto ban is further intensified by the fact that the IMC draft bill proposed in 2019 states that distributed ledgers can be categorised as public or private depending on whether the ledgers can be accessed by anyone or only the participating entities in the network.

In this case, any implications of the proposed ban on crypto trading in India will only become apparent when the government explains what is meant by “private cryptocurrencies”, and whether it’s defined on the basis of ownership.

“It is unclear at this point whether the Indian government will impose a blanket ban on cryptocurrencies, it is more likely that they will seek to regulate digital currencies through several restrictions,” said Anirudh Rastogi, the Founder of Ikigai Law, a company specialising in blockchain and cryptocurrencies.
“Some of the murmurs are that the government will ban the use of cryptocurrencies for payments, though that begs the question as to how gas payments will be made,” Rastogi told Capital.com.

A government ban prohibiting all “private cryptocurrencies” could have a dramatic impact on the wider crypto community and serve as a stumbling block to crypto’s advancement as an economic force in India.

 

Original Source: https://capital.com/cryptocurrency-ban-in-india

 

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j