Looks like international firms are also going all out to convince the Indian government to change their stance on cryptocurrencies. A new Quartz report has informed that Nishith Desai Associates, an international legal firm, has given suggestions to the Subhash Chandra Garg committee set up by the government to offer a regulatory framework for cryptocurrencies. According to the latest reports, the committee is in the final stages of preparing a draft cryptocurrency regulatory framework for India.
The international firm has made the following recommendations to the government panel:
- With any emerging technology, the pros far outweigh the risks associated with it. The firm gave the examples of similar concerns when electricity, railways, telecommunications
andinternet came about but they have all changed the world as we know it. Crypto is also in a similar situation where it brings substantial benefits, but the risks only ‘appear’ to outweigh the benefits in the initial phase.
- The firm said that the government should not treat cryptocurrencies like they treated Ola and Uber. These companies are very popular in India now but they faced a lot of opposition from many Indian states in their early phase. Some states had even banned these companies in their early days. The firm argues that a similar ban on crypto assets might encourage activities like money laundering and illegal transactions.
- The Indian Government has taken a positive stand on blockchain technology but has been negative towards crypto assets. The firm said that it is akin to liking the internet but not liking websites and emails. Crypto assets are an essential part of blockchain technology which
helpto incentivise decentralisation.
- The firm even gave the example of a real use case where blockchain technology has been implemented by West Bengal for birth certificates. Even though the use case is purely non-financial, this system works on its own token.
- They recommended a multi-pronged approach to this solution. They suggested dividing all the tokens into three categories, payment tokens (almost exclusively used for value transfer), security tokens (representing rights in physical property, company shares, or other underlying assets), and utility tokens (that grant right of access to a digital product or service). They also suggested that the security tokens can be regulated by SEBI whereas the existing gaps can be covered by making strict regulations around anti-money laundering, KYC, taxation and the IT Act.
Jaideep Reddy, a senior member of the law firm, told Quartz
“There are businesses which are operating under their own code of conduct and they don’t fall under any regulation right now. Therefore, a licensing regime should be introduced to ensure better standardisation and accountability”
It is good to see international firms engaging with Indian regulators. Let’s hope that the regulators have their ears open to these suggestions!