DAVOS – India needs to establish rules on cryptocurrencies to address regulatory uncertainties, protect investors and improve its crypto sector, Coinswitch CEO Ashish Singal said on Sunday.
Although India’s central bank has backed a ban on cryptocurrencies to jeopardize financial stability, the federal government’s move to tax them has been interpreted by industry as a sign of New Delhi’s acceptance.
“Users don’t know what will happen to their holdings – is the government banning them, not banning them, how will it be regulated?”
CoinSwitch, valued at 1.9 billion, says it is the largest crypto company in India with over 18 million users. The firm, headquartered in Bangalore, India, is supported by Andresen Horowitz, Tiger Global and Coinbase Ventures.
“Rules will bring peace … more certainty,” he added.
Blockchain and cryptocurrency companies have a large presence at this year’s Davos meeting, which coincides with the period of crypto depreciation around the world.
India’s central bank has expressed “grave concern” about private cryptocurrencies, but Prime Minister Narendra Modi said in December that such emerging technologies should be used to strengthen democracy, without undermining it.
Exchanges often fight partnerships with banks to allow remittances to India, and in April, Coinswitch and others disable rupee deposits through a widely used state-backed network, which worries investors.
Taxation measures and specific advertising controls have brought some relief, but more needs to be done, Singal said, adding that India should create a set of laws.
This should include rules for identity verification and transfer of crypto assets, while for exchanges, India should set up a system to track their transactions and report to any authority if necessary.
Although no official data is available on the size of India’s crypto market, CoinSwitch estimates that the number of investors is up to 20 million, with a total holding of about $ 6 billion.
Regulatory uncertainty has been widely felt. In April, Coinbase, the largest cryptocurrency exchange in the United States, was launched in India, but within a few days, the use of a state-backed interbank money transfer service was discontinued.
Coinbase CEO Brian Armstrong later said in May that the move was prompted by “informal pressure” from India’s central bank.
Coinswitch has also suspended so-called UPI transfers to negotiate with banking partners and make them comfortable, Single said in an interview. He added that Coinswitch is in talks with regulators to re-launch the transfer service.
“We are pushing for regulations. With the right rules, we can get clarity, “he said. (Reporting by Aditya Kalra in Davos; Editing by Alexander Smith)