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Full Statement: Nasscom Opposes India’s recommendation to Ban Cryptocurrencies

IT Industry body Nasscom (National Association of Software and Services Companies) has opposed the recent proposal for banning cryptocurrencies in India, saying it is “not a solution” and “regulatory framework must be developed”.

An inter-ministerial committee headed by Economic Affairs Secretary Subhash Chandra Garg on July 22 submitted the report and the draft bill on banning of cryptocurrencies and regulating official digital currencies in India. Crypto community was taken aback by recommendation of such a stringent measure and have been working towards reaching out to the government to re-evaluate the draft.

On the other hand, IT industry’s Apex body Nasscom earlier today in a statement said the ban would “handicap India” from the new technology offering.

NASSCOM believes that the recent proposal of the Inter-ministerial Committee of the Government to ban all cryptocurrencies barring those that are backed by the Government, is not the most constructive measure. Instead, the government should work towards developing a risk based framework to regulate and monitor cryptocurrencies and tokens. A ban would inhibit new applications and solutions from being deployed and would discourage tech Startups. It would handicap India from participating in new use cases that cryptocurrencies and tokens offer.

NASSCOM

Consumer Protection

The draft bill has cited concerns of consumer protection over Cryptocurrencies as they lack intrinsic value, have no central authority, transactions are irreversible, and are to an extent pseudonymous. One may argue that these are also some of the characteristics that make Cryptocurrencies such as Bitcoin, a greater hedge against Sovereign issued fiat money which is not free from the risk of hyper inflation as we have seen in Venezuela or Zimbabwe.

Nasscom is its statement addresses the concerns of the government by recommending a regulatory sandbox environment to test the use-cases. The body also emphasis that a ban may only deter legitimate players and not vice versa.

To address consumer protection concerns, cryptocurrency based businesses can be tested in the regulatory sandboxes being launched by the financial sector regulators across the country. We should work towards creating a regulatory framework that will constantly monitor and prevent illegal activities. Regulating would allow the law enforcement agencies to be better equipped to understand these new technologies, enable them to gather intelligence on criminal developments and take enforcement actions. Conversely, a ban is more likely to deter only the legitimate operators as they have no intent to be non-compliant.

Nasscom

Distributed Ledger Technology

The draft bill from IMC has lauded the underlying technology of Cryptocurrencies, which is commonly referred to as Blockchain. In its report, the Committee recommends multiple uses of DLT such as to reduce compliance costs for KYC requirements.

Acknowledging the embrace of DLT, Nasscom says

Additionally, the committee’s recognition of the potential of Distributed Ledger Technology (DLT) is a welcome step towards enhancing innovation in the ecosystem. We look forward to engaging with the government in considering how DLT can be used in India, to improve transparency, access to information and citizen services.

Nasscom

Finance Minister Says they may revisit the report

Recently, the finance minister Nirmala Sitharaman when asked about the draft bill, said the bill is “futuristic and well thought out”, but also mentioned they will look into again “soon” before making the government’s position clear on the same.

In the same lines, Nasscom’s statement ends with a note

We (Nasscom) will continue to working with government stakeholders and seek more discussions on this issue.”

Nasscom

For Crypto enthusiasts in India, this has come as a relief as support from industry bodies like NASSCOM can mean a big boost towards what now seems to be daunting task to change the perspective and opinion of a government of the largest democracy in the world.


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