The government is considering all options with an open mind when it comes to cryptocurrencies, and will make sure that the interests of investors are protected, Anurag Thakur, minister of state for finance, has said. The Union minister, however, raised concerns over the high volatility in digital assets
However, the government has just recently started taking a calibrated approach towards digital assets. And it is very much open when it comes to cryptocurrencies.
Thakur said the Reserve Bank of India is working on India’s own digital currency and the government has also constituted an inter-ministerial committee, where secretaries had submitted a report.
“In the new crypto Bill, all these aspects will be considered. All options are being considered with an open mind,” the minister said. But he had also highlighted some concerns over the extreme volatility in cryptocurrencies, such as Bitcoin and Ethereum. “Fiat currencies don’t see such fluctuation. We will ensure that the interest of crypto investors is protected in the Bill. But we want to make it clear that we are in favour of technology.”
The RBI, in April 2018, had imposed a ban on the holding and trading of cryptocurrencies in India because of the outlook that it could impact the working of the banking system and be used in promoting money laundering and terrorism – which is attributed to the anonymity of transactions. However, the Supreme Court in March 2020 rescinded the ban, giving relief to cryptocurrency start-ups.
As such, many cryptocurrency start-ups witnessed multiple folds of growth in their users. Numerous crypto start-ups could raise millions of dollars through the investments made by both Indian and foreign investment firms.
Moreover, international crypto players started investing in the Indian market through mergers and acquisitions. Analysts highlight that the cryptocurrency industry has the absence of a clear regulatory framework, and that is the biggest hurdle that is coming in its path of attaining a rounded-success. Start-ups want proper legislation, in terms of investment in cryptocurrencies, from the government.
During the financial year 2021, bitcoin jumped 800% from $6,641 on 1 April 2020 to $58,817 on 31 March 2021. The digital asset was trading at $60,865.44, up 1.8% around 1.25pm IST today, according to CoinGecko.
Welcoming the statements, Sumit Gupta, co-founder and chief executive officer of crypto exchange CoinDCX, said: “We are confident that sensible and positive regulations are on their way. Today, the world has accepted the immense potential of crypto assets and blockchain technology and with heightened interest levels in India, the government will do immense service to Indians by bringing positive regulations in this sector.”