Recently, there has been a bombardment of advertisements around cryptocurrencies in newspapers and billboards and digital media. The ads clearly harness the spirit of ‘Fear of Missing Out’ or ‘FOMO’, promising outrageous (1,000x) returns and overnight wealth creation, even for the first time investor. Is this a reality? Bear in mind the volatility of this space – a tweet from Elon Musk could undermine the value of bitcoin, one of the many currencies that are traded. But a gullible investor, or anyone who wants to make quick money, surely wants a part of it based on hype, even it means entering a market that is unregulated and unregulated.
Parliamentary Standing Committee on Finance held detailed discussions with stakeholders on Monday And the prime minister reviewed the matter with the finance minister and the RBI, so finally there seems to be a ray of hope that some structure will be brought into this unregulated space. How would a framework help India instead of sanctions? It will create a security for retail investors, Crypto companies based in India will not move out of India so there will be no flight of capital, it will create a healthy ecosystem for India and Indians to explore emerging technologies and become leaders and innovators Will prepare in this space.
Bitcoin, Ethereum, Dogecoin etc are some of the names that have become popular nowadays, especially among the youth. When we say bombardment of ads, citing the recently held World Cup T20, there were 51 cryptocurrency-related ads per match for an ad spend of 50 crores, 10 hours of ads most targeted at young investors. Such blitz and glitz without a policy framework for the sector is bound to raise regulatory and governance concerns.
The $3 trillion market has attracted investors from all over the world, especially retail investors. India is one of the many countries which have not taken a clear stand on this. The Supreme Court struck down an RBI circular banning cryptocurrencies in early 2020. Since then, there is talk that the government will introduce legislation on cryptocurrencies but nothing concrete has been done due to India’s conservative approach. Which is justified given the uncertainty of space. It maintains around 15 million active customers on various cryptocurrency exchanges without a safety net. The lack of awareness, transparency and clarity puts the money of investors, most importantly, retail investors at risk. This capital-intensive industry is not monitored or regulated in India and this should be the point from which India’s policy-making should begin.
As the popular saying goes, “You can love it or hate it, but you can’t ignore it”. According to industry estimates, various crypto currency exchanges have been valued at over $6 billion, a number too high for the government to look the other way, given that it could have huge economic implications if it remains unregulated. could.
India cannot and should not separate itself from the $3 trillion market. The ban would only create an underground parallel economy, encourage illegal use and defeat the original purpose of the ban. Most importantly, it will also contradict the Ministry of Electronics and IT’s (MEITY) draft National Strategy on Block Chain, 2021, which described blockchain technology as transparent, secure and efficient in putting a layer of trust on the internet. No one can promote blockchain, which is a part of technology-driven innovation, while its subsidiary, crypto assets instead of currency, if you can.
A regulatory framework would address two major concerns – lack of transparency and inappropriate advertising promoting risky behaviour. The regulation will protect investors and enable informed investment. Most importantly, regulation can aid in monitoring money laundering and terror-financing issues and also prevent scams (recently the Bengaluru hacking case, the squid game currency scam, etc.). An efficient regulatory framework would provide accountability to investors as well as a grievance redressal mechanism.
The US has been in favor of allowing all cryptocurrencies, Japan has allowed them, Singapore and Dubai seem to be the favorites for most, China has issued a complete ban on all cryptocurrency transactions and mining, while India is yet to decide . It becomes imperative for the government to bring in a law that understands the technology perspective, takes into account the inputs of all stakeholders and enables citizens to enjoy the benefits of this new age technology.
As the winter session of Parliament approaches, everyone is watching and hoping that the government will introduce legislation that will address the concerns of stakeholders and regulate the growing cryptocurrency market. Until then, stakeholders, especially crypto-investors, should HODL (Hold on for Dear Life).
(Priyanka Chaturvedi is a Rajya Sabha member and deputy leader of Shiv Sena.)
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