Government of India seem to be warming up to the crypto sector, as we get closer to December when India’s G20 Presidency will conclude, hopefully with a details set of regulations to govern the sector.
Rajeev Chandrasekhar, the Union Minister of State for Electronics and Information Technology, has acknowledge that crypto and Web3 are indeed, elements of the next generation of Internet.
He did add that rules and regulations are most need to govern the space to make it safe for everybody to use and engage with.
Rajeev Chandrasekhar said that the topic of cryptocurrencies has come up for discussion many times among the policy makers of India.
“Crypto, Web3, and Blockchain we cannot fight because it is the inevitable future of the Internet,” Rajeev Chandrasekhar said while emphasising on the utmost need for regulations in the sector.
As per Rajeev Chandrasekhar, crypto and Web3 without a guard have the capability of creating chaos and has a scope for misuse by notorious elements.
Rajeev Chandrasekhar said :
“On crypto, while everybody loves the technology, we think that the issue of INR to dollar conversions, that whole fungibility, exchange, and money transfer needs to be governed by some bond. And unfortunately, in India what happened, as well in the US, billions of dollars have been lost with the (industry) meltdown,”
He is referring to the collapse of FTX and Terra in 2022, that left the crypto sector dry for months as investors flock to safer, more traditional investment options.
FTX, the US-based crypto platform succumbed to liquidity crunch and shook-up the crypto market in November 2022, leading to the wipe-off of nearly $200 billion (approx. Rs. 16,40,298 crore) from the market.
The drastic reaction from investors who pull back capital from digital assets, left many crypto firms gasping for breath.
In a December 2022, research firm Glassnode estimate that around 550,000 Bitcoin had left crypto exchanges in 2022.
At the time, BTC was trading at $16,858 (approx. Rs. 13.9 lakh) that bought the value of 550,000 to $9.2 billion (approx. Rs. 76,760 crore).
Rajeev Chandrasekhar said, concerns had begun to brew when Indians start looking at Bitcoin and other cryptocurrencies as speculative assets, betting on how their prices would go up or down to churn profits.
Rajeev Chandrasekhar said :
“People started saying, how much is BTC today, how much will it be day after tomorrow, instead of saying I want to use BTC to transact my finances. So, when it became a speculative asset class in a bubble, the government had to intervene and say no. And as a matter of fact, the way we (India) approached it way back in March 2022, was the reason why many young Indians saved themselves from the meltdown that happened afterwards,”.
In India, crypto profits are tax by 30%, a rule that went live in March 2022.
In addition, 1% TDS is also deduct at each transaction in order to keep some trace of these largely anonymous fund transfers.
At the moment, India is spearheading the formulation of global rules to regulate this volatile digital asset space as the President of the G20 group.
Clarity on the situation is expect by December 2023.
Rajeev Chandrasekhar said :
“Crypto is a great area, I encourage innovations to continue there – but it certainly needs some global rules before it could be widely used,”.
