Officials in India appear to be warming up to the crypto sector as we approach December, when India’s G20 presidency will conclude, hopefully with a detailed set of regulations to govern the sector. Rajeev Chandrasekhar, Union Minister of State for Electronics and Information Technology, acknowledged that encryption and Web3 are indeed elements of the next generation of the Internet. That said, the minister added that rules and regulations are more needed to govern the space to make it safe for everyone to use and interact with.
Chandrasekhar, 59, was speaking on a podcast hosted by Indian YouTuber Ranveer Allahbadia when he said that the topic of cryptocurrencies has been discussed several times among policymakers in India.
“Crypto, Web3 and Blockchain we cannot fight because it is the inevitable future of the Internet,” he said, emphasizing the dire need for regulations in the sector.
According to the IT Minister, encryption and unguarded Web3 have the ability to create chaos and can be misused by notorious elements.
“In crypto, while everyone loves technology, we think the issue of INR to USD conversions, all fungibility, exchange and transfer of money needs to be governed by some bond. And unfortunately what happened in India, as well as in the US, billions of dollars were lost with the collapse (of the industry),” said Chandrasekhar, referring mainly to the collapse of FTX and Terra last year, which left the crypto sector dry for months as investors flocked to safer, more traditional investment options.
FTX, the US-based crypto platform succumbed to the liquidity crunch and rocked the crypto market in November last year, leading to the elimination of nearly US$200 billion (approximately Rs. 16,40,298 crore) from the market. The drastic backlash from investors pulling capital out of digital assets has left several cryptocurrency companies breathless.
In a report from December last year, research firm Glassnode estimated that around 550,000 Bitcoins had left cryptocurrency exchanges by 2022. At the time, BTC was trading at $16,858 (approximately Rs. 13.9 lakh) which bought the value from 550,000 to $9.2 billion (approximately Rs. 76,760 crore).
Chandrasekar said concerns began to arise when Indians started looking at Bitcoin and other cryptocurrencies as speculative assets, betting on how their prices would rise or fall to generate profits.
“People started saying how much BTC costs today, how much it will cost the day after tomorrow, instead of saying I want to use BTC to move my finances. So when it became a speculative asset class in a bubble, the government had to step in and say no. And indeed, the way we (India) approached this in March 2022 was the reason why many young Indians saved themselves from the meltdown that happened afterwards,” noted the Minister.
Breaking:rotating_light::India:flag-in: IT Minister Rajeev Chandrasekhar says: “Crypto and Web3 are the future of the internet.
However, encryption without some pros and cons can create chaos.”
International countries are looking to India to lead the way in rules, regulations and policies for… pic.twitter.com/IkHfWkd1H8
— KoinX (@KoinXOfficial) July 3, 2023
In India, cryptocurrency profits are taxed at 30%, a rule that came into effect in March last year. In addition, a TDS percent is also deducted on each transaction to keep some trace of these largely anonymous funds transfers.
At this point, India is taking the lead in formulating global rules to regulate this volatile digital asset space as chair of the G20 group. Clarity on the situation is expected by December of this year.
“Crypto is a big area, I encourage innovations to continue there – but it certainly needs some global rules before it can be widely used,” added Chandrasekar.