Move to ban cryptocurrency has Indian blockchain firms worried

Report on the Indian blockchain sector has shown a concern around a draft offered by the government to ban cryptocurrency and regulate digital currencies, recalling the previous criticism by industry stakeholders and entrepreneurs.

According to the yet to be released report gathered by Blockchained India, illegal transactions, lack of talent and evasion of taxes are some of the other critical problems disturbing the cryptocurrency and blockchain industry, primarily due to a lack of regulations.

An official of government told ET in April that the plan of the banning of Cryptocurrencies and regulation of official digital currencies bill 2019  has been issued to concerned departments.

A media reports suggested that holding, selling, or dealing in cryptocurrencies such as Bitcoin could entail ten years in jail. An RTI query filed by blockchain lawyer Varun Sethi reveals that the RBI had not issued such circular and it also had not received any communication from the government about such a draft. According to Anirudh Rastogi, "No official announcement has been made yet, and such a draft will take time to become law, especially if it is not a policy priority for the new government."

According to Nischal Shetty, CEO of Mumbai-based cryptocurrency exchange WazirX said the "Internet and Mobile Association of India is looking to discuss the regulations with the new government, but it's bound to take some time."

Those people who are investing in these assets were affected the most, as they were unsure of what is happening on the regulatory front. Indian VC investments in this sector totaled 5.3 $ million till date,  compared to $2 billion in blockchain equity deals globally, or the $20 billion raised through the ICO route, according to a report by Incrypt.
To resolve this issue of taxes evasion, the government cannot collaborate with cryptocurrency exchanges to bring in transparency, said Akshay Aggarwal, CEO of Blockchained India. All legal cryptocurrency exchanges would be ready to collaborate with the government, he added.

Industry insiders do not expect the government to make any significant announcements for the sector this year. However, it may initiate talks with experts to address their concerns. A case on the cryptocurrency-banking ban, which was scheduled for hearing in the Supreme Court earlier in March, has been postponed to the second week of July.

Last week, ET reported that an Indian delegation recently studied public blockchain activity in the Swiss city of Zug and is expected to recommend policy changes aimed at adopting a similar framework in the country.