Former Indian Secretary of Economic Affairs Subhash Chandra Garg believes that crypto assets should be regulated as commodities and not used as currencies.
Garg said this during an online conference with WazirX CEO of Indian cryptocurrency exchange Nischal Shetty and founder of the research company Crebaco Siddharth Sogani.
In 2019, Garg led the commission on the preparation of a bill prohibiting cryptocurrencies, according to which in some cases issuers, traders and holders of cryptocurrencies face a 10-year prison sentence and a fine of up to 25 crore rupees (about $ 3.3 million).
The Indian cryptocurrency community was deeply concerned about this bill, so Garg decided to discuss it with industry representatives for the first time. The legislator clarified that this bill does not imply the complete elimination of crypto assets from the Indian financial system.
Garg said he favors the use of cryptocurrencies as regulated goods, but digital assets cannot function as currencies in the country. If someone presents a “computer code” as a digital asset that users will invest in, it should be considered a commodity.
Accordingly, such an asset should be regulated on a par with traditional exchange-traded products, and anonymous cryptocurrencies should be completely banned in the country. At the same time, Garg spoke positively about the digitization of state currencies. He noted that the cryptocurrencies of the Central Bank will provide firms or individuals with better financial services.
The former Secretary of Economic Affairs of India does not see the point in using cryptocurrencies and believes that they will not be popular among the general population. However, he said that unlike cryptocurrencies, distributed registry technology has promising prospects, as there are many options for using blockchain in the financial industry.
In response, Nishal Shetty said that cryptocurrencies are essential to blockchain development. Shetty gave Garg an example that in order to keep Ethereum running, it is necessary to make transactions in ETH. He suggested that cryptocurrencies be perceived not as liquidators of the Indian rupee, but as an alternative means of payment, especially when it is not possible to use traditional money.
In turn, Siddharth Sogani noted that blockchain and cryptocurrencies are a new technology that “is based on practical experience, and not theories from books.” The government should not ban cryptocurrencies out of fear, but should understand the principles of their work and help develop the industry.
As a reminder, in April, Nishal Shetty noted a significant influx of traders to the WazirX platform after the Reserve Bank of India (RBI) ban on banking services for cryptocurrency companies was lifted.