Start-ups working in the cryptocurrency space in India have welcomed the Supreme Court’s decision to quash the Reserve Bank of India’s April 2018 order banning financial institutions from trading in the virtual currency.
However, stakeholders will adopt a wait-and-watch policy, especially since finance minister Nirmala Sitharaman has hinted at tabling a Bill titled Banning of Cryptocurrency and Regulation of Official Digital Currency Bill 2019 in parliament soon after the interministerial committee had recommended banning all kinds of cryptocurrencies in India.
Experts opine that Centre should introduce a tax clause in the Bill for cryptocurrency trade and ensure the security of assets in the crypto exchanges.
“We welcome the Supreme Court’s decision to lift RBI’s ban on trading in cryptocurrency. We believe that banning #tech is not the solution, a risk-based framework must be developed to regulate and monitor cryptocurrencies and tokens,” said apex IT industry body Nasscom.
Manit Parekh, India head of edutech firm ELSA Corp, who has dealt with Blockchain and cryptocurrency for 14 years, opined that the court order can have a massive impact on cryptocurrency sector overall, and give a big boost to start-ups that work with Blockchain technology.
Blockchain is a digital ledger that keeps track of all the cryptocurrency transactions, updated in real-time.
“A lot of start-ups working with Blockchain technology can now shift their focus to cryptocurrency and even raise funds other than the traditional means of institutional and venture capital investments. The decision will also enable more Foreign Direct Investment (FDI) to come into the crypto space in India, which wasn’t favourable due to a highly regulated environment and no-aid from the banks. Many foreign firms bringing FDI in verticals such as supply chain, finance and security that work with Blockchain technology will enter the Indian markets after the removal of the ban,” Parekh said.
Many foreign crypto exchanges, though not directly, banned from working in India, had expressed displeasure over the strict regulatory environment in the country as they refrained from trading here.
“It is a good move, as the world is now moving towards a universal currency. Presently, it is too early to imagine that cryptocurrency will replace the money that we are familiar with, but it is the currency of the future. Just like how investors are now buying gold-backed securities instead of actual gold, cryptocurrencies have become an asset class of their own in other parts of the world. This move will spur innovation,” said Krupesh Bhat, founder, LegalDesk.com.