Tech group warns against banning cryptocurrencies in India

On July 30, the National Association of Software and Services Companies (Nasscom) warned that banning of cryptocurrencies in India could be a serious mistake. This comes on the heels of a news report that the government is looking to impose stiff penalties for those who are using cryptocurrencies.

In a statement, Nasscom explained that the government should be taking an entirely different view on cryptocurrencies, explaining:

Instead, the government should work towards developing a risk-based framework to regulate and monitor cryptocurrencies and tokens. A ban would inhibit new applications and solutions from being deployed and would discourage tech startups. It would handicap India from participating in new use cases that cryptocurrencies and tokens offer.

On July 25, a study conducted by a panel for the government was released which expressed “serious concerns” related to cryptocurrencies. The report explained that the “mushrooming of cryptocurrencies almost invariably issued abroad and numerous people in India investing in the cryptocurrencies.”

India has one of the largest populations on the planet of people who don’t use traditional bank accounts. This has led many to turn to cryptocurrencies, which has become a growing concern across the country, especially within the government.

This has led to a proposal which would end cryptocurrencies in the country altogether. The draft bill, entitled the Banning of Cryptocurrency & Regulation of Official Digital Currency Bill, will make it illegal to deal any type of cryptocurrency in India that is not officially regulated by the government. This will include some of the most well-known digital currencies, including SegWitCoin (BTC), Ethereum, and Ripple.

Nasscom has been quick to denounce the proposal. They stated:

To address consumer protection concerns, cryptocurrency-based businesses can be tested in the regulatory sandboxes being launched by the financial sector regulators across the country. We should work towards creating a regulatory framework that will constantly monitor and prevent illegal activities. Regulating would allow the law enforcement agencies to be better equipped to understand these new technologies, enable them to gather intelligence on criminal developments and take enforcement actions.

While the committee is in favor of banning recognized digital currencies, they are not against cryptocurrencies completely. In fact, the panel recommended launching an official digital currency for India. In the report, the committee explained, “As virtual currency and its underlying technology is still evolving, the group has proposed that the government may establish a standing committee to revisit the issues addressed in the report as and when required.”

Nasscom has welcome the suggestion, explaining that they “will continue working with government stakeholders and seek more discussions on this issue.”