Will crypto bill end the policy grey areas? | India Development Debate
This monsoon session. All eyes were on it because it would have perhaps given us an idea of what exactly the government plans to do. So. The finance ministry and the rbi all have their views on what they want to do with cryptocurrencies. The rbi is pretty clear: theyre not interested in having something like a cryptocurrency at all. They are working on developing their own virtual currency that can be utilized but uh its a horse that has left the stable um right now. Crypto currencies are being traded and bought more widely than ever before. As we mentioned, the amount of money put in uh cryptocurrencies has grown multiple times in just the last year, so many companies which are acting as exchanges for cryptocurrencies or are part of the ecosystem have mushroomed. In the last several months, there are about 300. At last count some of them moving towards unicorn status as well. So can you really come now and say that no lets shut this shop down its unlikely? So what exactly are they going to do? Nishal chetty founder and ceo of wazirex with me on the show today, ashish single co, founder and ceo of coin switch kuber joining us on the show today and im also going to be speaking with god of the hakey founder and ceo of bitbns were just trying To get him connected so welcome to all of you initially, i just want to get your take first on the story that the economic times filed today, an exclusive story would seem to suggest that the government may classify crypto currencies depending on the technology they use as Well, as their end use, are they an asset? Are they a commodity or are they a currency? Yeah absolutely, and i think i think, thats a really positive uh step for the entire ecosystem.
In fact, i think everyones uh finally happy about uh this classification news, because before this it was all about uh. You know putting crypto under one basic umbrella of currency and now theres uh. Finally talk about how do you classify into various categories so asset or commodities? Is one of the many categories theres also uh, the obvious which is currency, but the majority of the use cases they fall under their utility and uh? The fourth is a security, so there are four major classifications of crypto and its just uh. You know a welcome move for the entire industry to hear that the government is also now aligning with that classification, so were all excited um. I think its a great progress for the entire ecosystem. Well, they might do it. They may not its all under uh consideration. So far, um mr shetty explained to me that, as someone who is you know has has high stakes in this ecosystem. Has the regulatory uncertainty hampered your growth in any which way? Because uh, your company and others in the space seem to be growing leaps and bounds? Give us a sense of how many more users have been added just in the last one year during the pandemic, when investors of all kinds have cropped up yeah, i think uh in terms of absolute numbers, i think, on our exchange, buzzy likes alone, weve added more Than uh four or five million people now in uh under, i think not even one year, i think under uh, seven to eight months and uh thats, a massive number of people entering the whole crypto ecosystem.
I think, as an industry, we are now well over 15 to 17 million uh people in the whole crypto ecosystem and uh thats, just testament to the fact that everyone in india is looking forward to a crypto as an asset class. Now, your question about you know is this: hampering the growth, the lack of regulatory, uh, certainty and thats thats for sure thats, a yes uh, its hampering growth, not just for one or two companies, but for the entire sector lets take, for example, uh investments into startups. In the sector, i think india still ranks one of the lower numbers compared to anywhere in the world like us and uk in terms of uh, i think you know even the number of uh startups that have grown large uh in india, its considerably lower compared to The rest of the world – and this is, i think, the regulatory uncertainty playing um. Despite this, the growth and the number of people entering the ecosystem, i dont think thats been happened, thats really uh going well, but ultimately, we are in a financial sector and regulatory clarity. Uh it sort of brings in more investor confidence, which is the most important that this sector needs. So we are all pushing for regulations in this sector as an industry. No, so many are also wondering whether um you know all of these investors coming in. Do they know that this regulatory regulatory uncertainty uh even exists ashish give us your view of the whole situation? Do you think there is even an outside chance now that um authorities could, as i said in my introduction, just down the shutters on this and say that no were not going to get into this uh? That time has passed isnt it looking at the explosion of the number of investors in cryptocurrencies yeah, definitely – and i think, looking at the growth and how india has shown significant growth in crypto in the last one year.
Coin alone has added nine and a half million users uh into the ecosystem, and you know the ecosystem grown to 15 to 20 million users now with over four billion dollars invested, and these users are not just coming from the one population. You know 60 percent of these users come from tier 2 and tier 3 cities, so the entire india is investing into cryptocurrency uh. There is a bleak chance that you know any regulatory direction may be taken, because this is not a certainty uh at this point, yet there is no bill out yet, but we are very hopeful in the way the you know. The direction uh has moved from february, where you know the bill was about to be able to to ban cryptocurrencies to where, where we are today, where you know, uh government wants to encourage cryptocurrencies, wants to experiment uh and see how how can it add uh to The economy itself and how? What would be the next steps and india would definitely not want to miss out on uh the new internet. The new crypto revolution uh, which is which is happening not just in india but around the world. Yeah gaurav great. To have you on the show as well, what are your concerns about? What could be in this note? What are you looking out for and what would you hope to see? I think the way the regulators have taken a stance in the recent uh sort of few months has been really really positive.
Uh. What we anticipate is uh. There should be proper classification around different segments, so maybe say payments uh as a utility for crypto or may be classifying that for other use cases for every single sort of a thing. If there is proper guidelines defined, that could be really helpful and instead of restricting any particular sort of utility, there could be a sandbox environment that would kind of help facilitate that. So i think uh. The government has kind of taken steps around that direction and will uh will wait and watch as to what kind of comes up in the bill in the coming few months. So uh mitchell, one thing is fairly certain and of course we have to wait to see what the final regulation is. But one thing is fairly certain that authorities government rbi, no one – is very excited by the idea of paying for things with cryptocurrencies using it as an actual currency. There are papers upon papers would say that it cannot be used as a fiat currency because of the very nature of its being. If that window is shut, do you think it then limits the use case scenario for cryptocurrencies, hence its investments, hence its growth and future. In india, not really, i think, uh in fact, thats a good point that you raised, i dont think crypto is trying to replace, or you know, compete with fiat currencies like the inr or the us dollar. What its trying to do is fill the gaps on the internet, uh, which you know traditional currency, does not really fulfill and uh theres a lot of those uh opportunities that crypto is already existing uh because as simple as you know today in the lack of regulation And no payment use case.
The industry is still over two trillion dollars in market cap and that itself just proves that you know. Uh crypto does not really need to come into the traditional uh payment mechanism, but it can fulfill payment, uh use cases which traditional currencies dont, for example, cross border uh. You know payments that might be a use case in remittance for india. That might be a use case that might emerge in the future, but again as on today, i think the the success of cryptocurrencies uh they come in in the use case. Where uh, you need to pay for smart contracts from the blockchain, for example, there you cannot use traditional currency, so that is where majority of the use cases lie and thats, where the progress is happening as on today uh. So i dont. I dont really believe that uh payment uh, the traditional payment use cases are something of a dampener. If cryptos cant get into that yeah you, you think it doesnt really matter ashish. Do you agree? Because i remember when the first uh round of crypto boom began? I think 2016. 2017. Everyone was very excited by this one coffee shop in bengaluru, which you know you could buy your coffee in cryptocurrency. For that may be unlikely. Do you think that will hamper the growth of this asset class in this country, and will it eventually be just that an asset class like you in can invest in 10 other things you can invest in cryptocurrencies as well? Oh, i absolutely believe that that you know uh crypto has gone much better on that bitcoin started as a replacement for currency, but, as the use case grew.
As you know, the problem statement grew now. It has become a platform to solve uh and build uh. You know some amazing use cases, micro lending for once insurance for others right uh, where we can streamline – and you know, digitize a lot of these processes, removing the bureaucracy and removing uh the hurdles that people face and the infrastructure that they need to get to be Part of these infrastructures, right so uh, say uh, insurance or micro lending, for example, just an internet and uh an application can now have you uh. You know you can take loans from it, no matter where you are in india, using crypto right so uh like national talk about remittances, can the backend be driven by uh, blockchain and cryptocurrencies helping and enabling faster transactions across countries? So the use case of cryptocurrencies? Have you know, uh for the last uh six to seven years have evolved beyond uh as a use of currencies, and it has started to move toward our asset class. Every crypto is trying to solve a very unique uh use case similar to startups and trying to create those products and be a digital first company at its core right and, as these use cases, get solved better and better each day. The value of these currencies as an asset class would grow where people can invest in these use cases and as the demand and supply for these use cases increases uh. They can get the benefit out of their investment.
You know i got ta. I have a slightly different question for you, as the crypto boom uh explodes in india right now. Theres a lot of investors who are looking for places to put their money and crypto is exciting. Its you know, uh its new um and its cool, its a its very millennial kind of thing as well. Do they understand what really this asset class is about? What happens if you know its uses, get really limited tomorrow due to government policy? What, if theyre taxed uh in a way which is not very friendly tomorrow, do you think that kind of investor knowledge is there right so like a lot of the people who are participating, crypto right now already have considered some of these things. Uh and theyre still participating imagine the amount of people that would come when there is actual regulatory clarity crypto without all of these clarities and with a lot of negative news that used to come come in every few months still had pulled managed to pull in about 20 million users in a span of a few years uh and like with the rate of momentum that it has, it would kind of cross the stock market users within a couple of years. Uh. The actual equity sort of traders in india, uh crypto users would be kind of higher than that. So users have already considered these sort of uh aspects around that, but, like the broader point, remains that you cannot stop a technology as time has come right so tomorrow tomorrow, if india says we are not going to allow electric vehicles thats not going to fly, people Would kind of have a way to kind of uh get electric vehicles and uh within a few years or a decade or so like most of the cars that would fly in uh in india would be electric right.
So crypto is that sort of a movement and were seeing that sort of manifestation that has kind of happened. Quite a few countries started restricting it. So there are multiple examples like sidelined and others. We started restricting it, but it kind of got overturned and now theyre kind of pro crypto, with regulations kind of in place in the next 18 to 24 months, well see most countries most major countries, kind of having proper set regulations for crypto across the world. Yeah uh, i think, uh you cant, stop an idea whose time has come thats the big quote from this discussion: uh. Initially you want to come in on that. Do you think its only fair that investors who are coming into this actually no and thats a legitimate concern isnt it that do people putting in money in crypto and companies like yours and others have made it incredibly easier for them to do it? Its almost like you know just putting in a little amount of whenever they feel like the technology has become very easy. Do they actually know what theyre investing in yeah? Look, i think uh. The most important thing to understand out here is the largest age group. The demographic of uh people in crypto is in the 23 to 30 years, and this is this is the internet first population. And if you, if, if theres one thing, theyre really good at its extracting information online and i believe that most of them are well read and uh, they understand.
But apart from that as an ecosystem, what we are all doing is spreading the right information about crypto through a ton of education initiatives as an industry uh. We in fact also have uh a industry. Uh effort to you know sort of self regulate ourselves, even in the absence of regulation, so i think all of these are adding to an informed ecosystem. So i dont, i dont, really believe that we have a problem of misinformation. In fact, the misinformation tends to be more towards negative, where people still and there are people who who think that india has banned crypto, which is not the case um, so so theres. No one who thinks that you know crypto is all uh regulated and uh its all uh hunky dory out here. People are coming with a view that its still unregulated and uh, the governments still not taken a hard position on that. So lets invest cautiously and i think thats, what a majority of the people in the ecosystem are have an outlook towards this yeah. I think the fact that it is widely world over foxed governments, i would say who are not too sure what to do with this asset class, how to treat it, how to tax it, how to regulate it and it has backers in the united states like elon Musk has made it all the more exciting uh interesting insight there from nichol about the the 23 to 30 year old age bracket, who are fans of cryptocurrencies well lets hope that theres regulatory clarity, um no business no sector should really grow in this gray area, where No one knows what will happen next and the sooner that is cleared up the better, so well keep an eye on that story.