India needs to set rules for cryptocurrencies to resolve regulatory uncertainty, protect investors and boost its crypto sector, CoinSwitch CEO Ashish Singhal said on Sunday.
While the Reserve Bank of India (RBI) has backed a ban on cryptocurrencies due to risks to financial stability, a move by the central government to tax revenues from them has been interpreted by the industry as a sign of New Delhi’s acceptance.
“Users don’t know what will happen to their property – is the government going to ban it, not ban it, how will it be regulated?” Singhal, a former Amazon engineer who founded CoinSwitch, told Reuters at the World Economic Forum in Davos.
CoinSwitch, valued at $1.9 billion, says it is the largest crypto company in India with more than 18 million users. The company, based in Bengaluru, India’s main tech hub, is backed by Andreessen Horowitz, Tiger Global and Coinbase Ventures.
“Regulation will bring peace … more certainty,” he added.
Blockchain and cryptocurrency companies have a strong presence at this year’s Davos meeting, which coincides with a period when crypto prices around the world are plunging.
RBI has expressed “serious concerns” about privately held cryptocurrencies, but Prime Minister Narendra Modi said in December that such emerging technologies should be used to strengthen democracy, not undermine it.
Stock exchanges in India often struggle to partner with banks to enable remittances, and in April CoinSwitch and a few others disabled rupee deposits through a widely used state-backed network, alarming investors.
While tax measures and certain advertising regulations had brought some relief, much more needed to be done, Mr Singhal said, adding that India should develop a series of laws.
These should include standards for identity verification and transferring crypto assets, while for exchanges, India should put in place a mechanism to track transactions and report to an authority if necessary.
While no official data is available on the size of the crypto market in India, CoinSwitch estimates the number of investors at up to 20 million, with total holdings of approximately $6 billion.
Regulatory uncertainty is widely felt. In April, Coinbase, the largest cryptocurrency exchange in the United States, launched in India, but within days it stopped using a state-backed interbank money transfer service.
Coinbase CEO Brian Armstrong later said in May that the move was triggered due to “informal pressure” from RBI.
CoinSwitch has also paused the so-called UPI transfers to have conversations with banking partners and put them at ease, Singhal said in the interview. He added that CoinSwitch is in talks with regulators to try to restart the transfer service.
“We are pushing for regulation. With the right regulation, we can get clarity,” he said.