The Indian National Association of Software and Services Companies (Nasscom) releases report that calls for regulatory certainty, particularly in areas such as cryptocurrency. The lack of legal clarity and the crypto banking ban have hindered investments in the sector.
The association believes that the lack of legal regulations has hurt crypto exchanges, and driven investors out of the country.
Nasscom’s Vice President Sangeeta Gupta unveiled key highlights from a report at Nasscom’s flagship Technology and Leadership Forum held from Feb. 20-22 in Mumbai. The report was jointly developed by Nasscom and management consulting firm Avasant, it detailed the current state of India’s blockchain industry, including cryptocurrency.
According to the report there is a dire need for regulatory certainty for the blockchain and cryptocurrency industry. The report suggests that “A proactive, consultative and defined regulatory approach to blockchain will boost the blockchain ecosystem growth in the country. Industry participants in India are constrained due to the cautious regulatory approach taken with respect to specific elements of blockchain, such as cryptocurrency and digital assets.”
The report also emphasized that India needs to act fast and work consultatively with the key stakeholders in the crypto/blockchain community and provide regulatory certainty and clarity around blockchain technology (specifically around cryptocurrencies and digital tokens).
Even though VC investments pouring into the blockchain ecosystem all across the globe, India has seen less than 0.2 percent of global investments, Nasscom detailed.
The investment inflow through VC firms or ICOs in the blockchain ecosystem in India has been substantially low (totaling to USD 8.5M) due to the uncertain policy and regulatory environment in the country.
Crypto exchanges such as Unocoin and Zebpay, which made some of the initial, sizeable investments in India had to disable trading through fiat currency due to an RBI directive. A restrictive regulatory environment in India is limiting the investment opportunities from both domestic and global investors into Indian start-ups.
The report additionally noted that the lack of regulatory certainly has driven India-based investors and startups to establish operations overseas in countries such as Malta, Singapore, the U.K., and Switzerland “to limit their exposure to regulatory risk associated with the use of digital tokens or assets in India.”
Currently there is no formal regulatory framework governing crypto exchanges, preventing access to formal banking channels has led to the shutdown of prominent crypto exchanges in India.
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