If the Indian government decides to propose a ban on cryptocurrencies, it needs to come up with a path to reimburse 7 million people who hold assets worth over $1 billion, believes Nischal Shetty CEO of one of India’s leading investment platforms WazirX. Nischal is still hopeful that a complete ban of cryptocurrencies including bitcoin is unlikely and the government may just regulate the trade. To recall, the Indian government has tabled the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, in the parliament.
The proposal comes at a time when several cryptocurrencies including Bitcoin and Dogecoin have seen a massive surge in their value. Bitcoin has crossed the $50,000 mark for the first time after getting investment from Elon Musk’s Tesla. Shetty said that even WazirX witnessed a rise in sign-ups following Musk’s investment. He said that investors must also understand that cryptocurrencies are high risk investment tools, and they need to do their research before investing.
Here are the edited excerpts of the interview:
The proposed bill to ban cryptocurrencies in India have once again brought them to spotlight. How do you think this bill can impact the industry?
We know that the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 is among the list of bills to be presented in this Parliament session. However, I want to add that the contents of the bill are not known. I’m optimistic that our government will not go for a regressive move like an outright ban. As per Mr Anurag Thakur’s statement in the Parliament, the bill is drawing upon Garg Committee’s IMC report titled as “Banning of Cryptocurrency and regulation of official digital currency” in 2019. This has probably been tweaked to be now called “Cryptocurrency and Regulation of Official Digital Currency Bill, 2021”. It’s interesting to notice that this time around, there’s no mention of a ban in the name of the bill. Mr. Thakur has also added that their intention is to regulate crypto.
If the bill proposes a complete ban on crypto however unlikely the government has to come up with a path to help 7 Million+ people who currently hold assets worth $1 Billion+ on how to reimburse them for this. The government cannot erase wealth of such a large section of people in India as it would likely lead to an economic crisis in the country..
If a blanket ban is imposed. What are the numbers we are looking at? How many investors or how much wealth can be hit?
Today, the crypto community consists of over 10 Million HODLers, 300+ startups generating tens of thousands of jobs and hundreds of millions of dollars in revenue and taxes. A blanket ban will not only affect investors, but also honest businesses, employment of thousands of people, and our economy adversely. The right crypto regulation will push India ahead in this innovative technology while wrong regulation such as a ban on Crypto will set our country back by a decade. We’ll never be able to catch up with the rest of the world and end up losing a golden opportunity in this sector.
Interestingly, this bill is being discussed at a time when Elon Musk has invested in Bitcoin. How do you think that can change the dynamics?
I’m optimistic that our leaders will at least discuss with us industry participants to understand the ground realities of Crypto before going ahead with any bill around this technology.
Compared to the US and other countries, India has lesser institutional participation in crypto, and it’s due to regulatory uncertainty.. Institutional players would need regulatory clarity before participating in a new asset class like crypto. Regulation will certainly help the crypto industry in India.
Have you seen a surge in number of investors in India following Musk’s investment?
The most recent news of Tesla buying $1.5 Billion worth Bitcoin and adding it to its treasury funds has caused Bitcoin price to cross $50,000 for the first time. We have seen a surge in our trading volume and user signups since then. Such news about institutional participation encourages retail investors to read and understand about crypto as an alternative investment class.
When global leaders are backing cryptocurrency and Tesla has even decided to accept it for payment, what do you think is stopping India from embracing it?
It’s mostly the lack of information. Unfortunately, India hasn’t yet been able to create deep expertise in crypto. Blockchain is a nascent technology, and Indian government needs to involve technologists in understanding it.
WazirX is a part of the Internet and Mobile Association of India (IAMAI). Currently, we are working on a code of conduct for cryptocurrency companies in India. The code of conduct lays out a guideline for KYC/AML and other regulatory-related features. This will help curb the illegal activities as well as scams. This way, exchanges can also help the law enforcement agencies as well as educate masses.
Developed countries such as US, UK, Japan, Australia, EU region, etc. are tackling crypto in a similar way so that they foster innovation and fight crime at the same time.
There are definitely few grey areas. As far as investors go, what should they keep in mind while investing in cryptocurrency?
Cryptocurrency is new alternative asset class. With increasing institutional participation, Bitcoin is emerging as a store of value around the world. Over the next few months, we’ll see crypto go mainstream faster with more retail investors, and first-timers entering the market. As a first timer in crypto, the most important thing you should bear in mind is that that crypto is a high risk, high reward investment option. You should invest based on your risk appetite.
I also recommend using legitimate exchanges that follow KYC and AML guidelines. Like any other industry, it’s important to beware of get-rich-quick scams or people who promise to double the invested amount, etc.
Apart from bitcoin, what are the other cryptocurrency investors should keep an eye on?
Bitcoin has been around for over a decade, and it has withstood two global recessions. It is now emerging as a mainstream investment class around the world. As of today, there are over 8400 cryptocurrencies available. As an investor, I’d recommend that you do your due diligence before investing in any cryptocurrency. Before investing in a project, we recommend users to always read its whitepaper, about the team and their background, project development status, and team activity on social media.