Although India’s central bank backed the ban on cryptocurrencies due to financial stability risks, the federal government’s decision to tax the revenue they generate was interpreted by the industry as a sign of acceptance by New Delhi.
“Users don’t know what’s going to happen with their assets – will the government ban, not ban, how will it be settled?” Amazon, which co-founded CoinSwitch, at the World Economic Forum in Davos.
CoinSwitch, which is valued at $1.9 billion, claims to be the largest cryptocurrency company in India with over 18 million users. The company, based in Bengaluru, India’s main technology hub, is backed by Andreessen Horowitz, Tiger Global and Coinbase Ventures.
“Regulation will bring peace … more certainty,” he added.
Blockchain and cryptocurrency companies have a strong presence at this year’s Davos meeting, which coincides with a period of falling cryptocurrency prices around the world.
India’s central bank has expressed “serious concerns” about private cryptocurrencies, but Prime Minister Narendra Modi said in December that these emerging technologies should be used to strengthen democracy, not undermine it.
Stock exchanges often struggle in India to partner with banks to enable the transfer of funds and in April CoinSwitch and a few others disabled rupee deposits through a widely used state-backed network, alarmingly Investors.
CLARITY
While the steps taken on taxation and advertising regulations have brought some relief, more needs to be done, said Singhal, adding that India should come up with a set of laws.
These should include standards for identity verification and transfer of crypto-assets, while for exchanges, India should put in place a mechanism for them to track transactions and report them to any authority if necessary.
Although no official data is available on the size of the Indian crypto market, CoinSwitch estimates the number of investors to be as high as 20 million, with total holdings of around $6 billion.
Regulatory uncertainty has been widely felt. In April, Coinbase, the largest cryptocurrency exchange in the United States, launched in India, but a few days later it paused the use of an interbank funds transfer service supported by the tat.
Coinbase CEO Brian Armstrong later said in May that the move was made due to “informal pressure” from India’s central bank.
CoinSwitch has also paused so-called UPI transfers to chat with banking partners and make them feel comfortable, Singhal said in the interview. He added that CoinSwitch was in talks with regulators to try to restart the transfer service.
“We are pushing for regulation. With the right regulation, we can get clarity,” he said.