News about the Indian Ministry of Finance circulating a “note”
for inter-ministerial consultations of cryptocurrency regulations
spurred panic within the Indian crypto community. Worries about the 2019
draft bill proposing a blanket ban of cryptocurrencies and possible 10
years sentences for crypto users had kicked in once again.

In an
interview with Cointelegraph, Ashish Singhal, the founder and CEO of
Indian cryptocurrency exchange CoinSwitch, said that the chances of the
government placing a blanket ban on digital currencies has reduced
considerably as compared to 2019. 

Singhal said that in 2019, when
the draft bill was proposed, the possibility of a ban seemed high due
to the lack of support for cryptos from the central bank, the Reserve
Bank of India. To add to that, there was a crypto banking ban already in
place and things looked quite uncertain, he added.

This year, things are different. The reversal of RBI’s banking ban by the Supreme Court in March, followed by the central bank clarifying
that financial institutions were no longer prohibited from providing
services to crypto-related entities, shows a change in the way cryptos
are perceived in India, highlighted Singhal:


“Right
now, the proposed draft bill has a low probability of passing. There are
smart people in the government who would take the right steps forward
rather than just banning cryptos altogether.”


Regulations are important for user protection and the industry’s growth


The
primary issue that keeps the government skeptical of the digital
currency space are cases of fraud and thefts, Singhal said. This makes
it even more important for the government to bring better rules and
policies for this industry and strengthen user protection. That is the
end goal, he said.

Reflecting on the possibility of a crypto ban,
Singhal stated that banning cryptocurrencies will certainly be easier
compared to bringing the right regulations, but it will only curb legal
activities while illegal actors may still be able to continue their
business.

Hence, he said, proper regulations will majorly benefit the legal side of crypto and blockchain businesses. 


Governments must take a step-by-step approach


At
present, the blockchain and crypto industry only contribute a minuscule
amount to the Indian economy, and hence, banning cryptos might not
impact the economy instantly. However, according to Singhal, it is a
booming industry and its cumulative impact over the years could actually
cause a huge loss of opportunities for foreign investments and more
jobs. 

To that end, he stated, no one right now can be extremely
sure of how to regulate the crypto industry, so governments must take a
step by step approach, first ensuring the safety of users and their
funds, then defining specifically securities, utilities, and tokens, and
guiding users in the right direction. In the end, he said:


“It will take time. A single regulation or a single bill will not change everything.”