To overcome regulatory ambiguity, safeguard investors, and develop India’s crypto business, CoinSwitch CEO Ashish Singhal stated that the country needs to adopt rules on cryptocurrency.
Although India’s central bank has advocated a ban on cryptocurrencies due to threats to financial stability, the industry has taken the federal government’s plan to tax cryptocurrency income as a sign of approval by New Delhi.
Singhal, a former Amazon programmer who co-founded CoinSwitch further, said that users are uncertain about their holdings regarding whether the government will ban cryptos or how they will regulate them same. He was talking at the World Economic Forum in Davos. After two years, the World Economic Forum is back in Davos as the coronavirus pandemic kept all the economic leaders and experts away.
CoinSwitch, which has a market capitalization of $1.9 billion, claims India’s largest cryptocurrency startup, with over 18 million customers. Andreessen Horowitz, Tiger Global, and Coinbase Ventures are investors in the Bengaluru-based startup.
He continued, “Regulations will offer serenity… more certainty.”
This year’s Davos gathering features a great representation of blockchain and cryptocurrency startups, which coincides with a period of global crypto price declines.
Although India’s central bank has expressed “severe worries” about private cryptocurrencies, Prime Minister Narendra Modi stated in December that such emergent technology should be used to strengthen rather than destroy democracy.
Need for clarity on cryptos in the Indian market
In India, exchanges frequently struggle to form partnerships with banks to facilitate fund transfers. In April, CoinSwitch and others disabled rupee deposits through a widely utilized government-backed network, which alarmed investors.
While tax reform and some advertising regulations had provided some relief, Singhal argued that much more needed to be done and that India should adopt a set of laws. India proposed a levy of 30% tax on crypto earnings and plans to impose 18 % to 28 % GST as a reverse charge on foreign crypto exchanges.
These should include rules for verifying identities and transferring crypto assets and a system for exchanges to follow transactions and report them to authorities if necessary.
While no official data on the size of India’s crypto industry is available, CoinSwitch estimates that there are up to 20 million investors in the country, with total holdings of over $6 billion.
There has been widespread regulatory ambiguity. Coinbase, the world’s largest cryptocurrency exchange, launched in India in April but soon stopped using a government-backed inter-bank fund transfer service ( UPI ).
Later in May, Coinbase CEO Brian Armstrong stated the move was prompted by “informal pressure” from India’s federal bank. Apart from Coinbase, various other crypto exchanges from India disabled the feature of UPI money transfer.
According to Singhal, CoinSwitch has also suspended so-called UPI transfers to have conversations with banking partners and ensure their comfort. CoinSwitch is in talks with regulators to reinstate the transfer service.
“We are advocating for legislation. We can get clarity with the correct regulation, ” Singhal remarked.