Crypto Bill should look at capping foreign currency exposure, registering authorised dealers: IndiaTech
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Amidst several ongoing discussions on the draft cryptocurrency Bill, industry body IndiaTech on Friday said the Bill might seek to cap foreign currency exposure an investor can have annually while buying crypto assets.
The Bill is also expected to define and register authorised dealers or exchanges in a regulated manned.
Following the meeting of the RBI and cryptocurrency industry stakeholders earlier this month, IndiaTech had made several suggestions to the central bank, most of which have been kept confidential, apart from a white paper asking for stricter Know Your Customer (KYC) rules to be followed by the Indian crypto exchanges.
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Rameesh Kailasam, CEO, IndiaTech.Org, told BusinessLine: “The draft crypto Bill should ideally also cover aspects as to how much of foreign currency exposure one can have for buying crypto in an year.
“Also, what type of crypto, from whom you can buy and where such authorised dealer equivalents should be registered. Reporting mechanisms and authority for suspicious transaction reporting by exchanges would also be necessary.”
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At present, the thriving crypto industry in India which already has two unicorns, has been self-regulating and operating in a grey area with nearly no rules to monitor them. This has left many retail investors clueless when there are platform crashes, loss of money and technical glitches during high volume of transactions.
Coupled with this, RBI’s regular warnings to the banks to avoid servicing cryptocurrency exchanges has only left the exchanges more troubled.
Meanwhile, RBI governor Shaktikanta Das has been reiterating his views on not allowing cryptocurrency in the country, calling it a major concern to macro-economic and financial stability of the country.
Changing bank accounts
Some of the retail investors, BusinessLine spoke to, said the exchanges even have to keep changing bank accounts at regular intervals to keep business running, about which they update them over emails.
An industry insider said: “Stability in this sector will only come through regulation. Sudden withdrawal of banks from providing services to the exchanges based on RBI’s notices and recommendations leave exchanges with no choice but to keep changing bank accounts to service the investors.”
Protecting smaller investors
The major focus of The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 will be to protect the interest of small-time investors with limited resources while improving the health of the overall ecosystem.
A few steps towards the same would be to have a centralised filtering mechanism for cryptocurrencies and allowing only a few that are reliable and eligible for the Indian market, IndiaTech recommended. The bill might even specify limits of exposure to cryptocurrencies in an investor’s portfolio mix.
“There needs to be a filtration mechanism formulated on what crypto assets, tokens etc. will be allowed to be traded in India. It is important that a mechanism should ideally be formulated on what kind of cryptocurrencies will be eligible for trade in India,” Kailasam said.
He said that out of over 10,000 cryptocurrencies, there are only 150-200 cryptos that are allowed to be traded at present, as Indian crypto exchanges already follow a similar filtration process.
Kailasam emphasised that investor education is fundamental and dos and don’ts for customers must be clearly brought out as this sector also requires huge amount of customer diligence.
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