During a webinar on July 17, former Indian Finance Secretary Subhash Chandra Garg discussed crypto currencies with Indian industry leaders, including Nischal Shetty, the CEO of the Indian crypto currency exchange WazirX, and Siddharth Sogani, the founder of the blockchain research company Crebaco.
In 2019, Garg together with his secretariat drafted a bill proposing a ban on cryptomonies along with a prison sentence of 10 years and a fine of up to 25 million rupees (~ USD 3.3 million) for anyone who issued, used or held these assets.
Opening a dialogue with the industry
Today was the first time that Garg discussed the issue with members of the crypto-currency industry, allowing the former Secretary to clarify a longstanding perception that the proposed bill was to completely eradicate cryptoactives from the Indian financial ecosystem.
India’s leading agricultural producer organization will use blockchain technology for supply chains
Garg said he approved the use of cryptoactives as regulated commodities, but added that they should not be allowed to function as currencies in India.
In Garg’s opinion, there is no problem with someone presenting „computer code“ as a digital asset and with people wanting to invest in it. But that way, he said, crypto-currencies are more likely to be a tradable commodity rather than a currency, and should be regulated from the same point of view.
He also insisted that private crypto assets as currencies have no justification to exist and should be banned.
It’s time to digitize coins, but not cryptomonies
In sharing his thoughts on the digitalization of money, Garg said that the way we perceive and use money has changed greatly over time. Today, the digitization of money and the creation of a digital central bank currency is part of a general need to provide better financial services, he said.
Mobile applications of crypto-currencies are on the rise in India following the Supreme Court decision
He said there are several ways the Indian government could digitize the rupee, and cryptoactives based on distributed registration technology was only one of those ways. However, he strongly disapproved of the digitization of money using crypto assets and preferred the use of dematerialized banknotes, saying
„The way crypt coins work is about distributed recording technology. It’s a high-investment technology. It can never be the currency of an ordinary man.“
Advocates of crypto coinage respond
While Garg did not find a logical reason for the existence and use of cryptoactives, he showed a strong attraction to distributed registration technology, claiming that it has many promising use cases in the financial landscape.
To that end, Nischal Shetty of WazirX said cryptoactives are important in driving blockchain innovation. Sharing the example of implementing code in Bitcoin Circuit blockchain, he explained to Garg that doing so requires a developer to make a payment in Ether (ETH), which is a cryptomoney.
India’s potential ban on crypto-currency is low compared to 2019, according to CoinSwitch CEO
These payments cannot be made in the Indian rupee, he said. Therefore, crypto-money should not be seen as a replacement for the rupee, but as an alternative form of payment in places where traditional money cannot be used.
He also mentioned the importance of cryptomonies in micro-payments, loans and other financial verticals.
Reflecting on the novelty of the technology, Siddharth Sogani of Crebaco said that blockchain and crypto currencies are a new technology and that each knowledge „is derived from practical experience, not from a set of books.
Sogani concluded that the government should not ban cryptomonies out of fear, but should strive to understand the technology and help it grow.