Several Indian cryptocurrency exchanges have collaborated on a presentation note intended for regulators.
The note makes recommendations on how best to regulate cryptocurrencies, as well as addressing associated risks. These include issues such as money laundering, threats to the rupee and the environmental impact of crypto mining. The intended recipients include Finance Minister Nirmala Sitharaman, the Reserve Bank of India (RBI), the Department of Economic Affairs and the Ministry of Electronics and Information Technology.
Crypto Exchanges Unite
On February 24, the governor of RBI, Shaktikanta Das, expressed concern over cryptocurrencies and advocated for a ban. The Blockchain and Crypto Council, a group of crypto exchanges and advocates, has used the time since then strategically. The presentation note is their effort to understand regulators’ concerns and establish a comprehensive set of solutions.
Apart from the general issues listed above, the note also includes more specific details. One example is a code of conduct for cryptocurrency exchanges to follow on a day-to-day basis. The white paper also highlights the potential effects of a crypto ban in India and data on the global regulatory landscape.
According to Nischal Shetty, co-founder, and CEO of crypto exchange WazirX, this is the first time the industry is sending a presentation with data and relevant content. Prior communications have been merely emails. “Eventually, our hope is that we will be invited where we can present our case formally. But we did not want to wait; we wanted to take a proactive approach,” he said.
However, individual crypto exchanges have made similar overtures in the past. Between 2015-2018, crypto exchanges Unocoin and ZebPay sent several communications to RBI to address potential concerns.
According to Sathvik Vishwanath, co-founder, and CEO of Unocoin, the communications included recommendations on regulating crypto in India and an overview of the crypto industry. “We have approached different high-level officers at the RBI, but it’s only been a one-way conversation,” he said.
India’s Regulatory History
The first time RBI expressed concerns about virtual currency in 2013. That year it issued a Financial Stability Report later. However, since then, crypto exchanges have continued to grow. This is fortunate for the industry because it was a petition that caused the withdrawal of an outright ban on cryptocurrencies in 2018.
Currently, the Indian Parliament is underway to ban private cryptocurrencies. However, Finance Minister Nirmala Sitharaman expressed reservations over an outright ban. As India’s role grows in the global FinTech sector, he feels the country should take a more nuanced approach not to jeopardize its potential. Despite the regulatory risks, ZebPay CEO Rahul Pagidipati said he expects his trade volume to continue growing this year.