Cryptocurrency investors in the country are in a panic mode since the Centre’s announcement that it will table the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, in the Winter Session of the Parliament. Bitcoin, the biggest cryptocurrency in terms of market capitalisation, fell over 8% in the 24 hours post the announcement.
Crypto investors got spooked by the language of the document, which aims at banning 'private cryptocurrencies.' While Finance Secretary TV Somanathan cleared the air by saying that people are overreacting, he added that cryptocurrency will not be a legal tender. "The term ‘private cryptocurrency’ adds a lot of ambiguity as blockchain and crypto are decentralised in nature and cannot be termed as private," says Shivam Thakral, CEO, BuyUcoin.
As per ZebPay’s co-CEO, Avinash Shekhar, Bitcoin, Ethereum and other such token holders can breathe a sigh of relief. “As per our understanding, these are completely public cryptocurrencies as they are built on public blockchain networks. Transactions are traceable, however they are completely anonymous,” he says. In Shekhar's view, coins like Monero and Dash 'may' be considered as private tokens. While they are built on public blockchain networks, they conceal transaction information to provide privacy to users.
Industry experts are optimistic that there will not be a blanket ban and the speculation around the term ‘private cryptocurrencies’ will be put to rest once the fine print of the bill is out. “We have been engaging with the government and regulatory authorities and they have been open and inclusive,” says Gaurav Dahake, CEO & Founder Bitbns. In fact, he adds, the statement by the Finance Minister on adopting a calibrated approach towards regulating crypto earlier this year was a significant move in the positive direction for the industry.
The text of the draft bill states that RBI will launch its digital currency. It also mentions that they are likely to allow major crypto assets and make a framework for other crypto assets to get listed on the Indian exchanges. "It is a positive step surely," says Thakral.
As per Kumar Gaurav, founder and CEO of Cashaa, the government is trying to regulate crypto in line with FATF guidelines. "We need to keep faith that the government will take progressive steps and will allow the rest of the industry to thrive."
What should crypto investors do?
One should stay on course as digital assets are the upcoming generation's real assets class, suggests Gaurav. The panic, he says, has had zero impact on the global crypto market, and was mostly created by new investors. Mature investors, he opines, understand that there is no way for the government to control Bitcoin other than by regulating it. "The industry is not dying down, one can look at this like a buying opportunity. Continue to invest in good cryptocurrencies as long term Investment, stay out of private cryptocurrencies, enjoy the NFT craze but don’t sell your house to become rich quickly,” adds Gaurav.