Legal Status of Bitcoin in India to Be Addressed at Global Summit

After the demonetization of 85 percent of the circulating currency in India in November 2016, ASSOCHAM organized the first global summit on Blockchain technology. Now it is all set to hold the second global summit on Blockchain technology with a focus on opportunities and challenges for the Indian economy.

ASSOCHAM is a ‘chamber of chambers’ in India having been in existence since 1920 and having in its fold more than 400 industry chambers. The mission of ASSOCHAM is to ‘articulate the genuine, legitimate needs and interests of its members.’ They are also thought of as promoters of new business models.

Going beyond just a nascent technology

While the Blockchain has made a major impact in the world and its potential has been realized and is being released around the globe, in India the situation is still one of considering Blockchain as a nascent technology.

The Second Global Summit which will be held in Bangalore on Friday, 21st April 2017 will focus on opportunities and challenges associated with Blockchain technology and explore the future prospects in India.

The key discussion areas for the summit are impact of Blockchain technology on banks, insurance and financial institutions, legal perspectives and regulation from Bitcoin to Blockchain, applications of Bitcoin and Blockchain and criminal activity, security and data in the Blockchain.

It is expected that a wide variety of people from different backgrounds will attend the summit including company management, telecom and IT sector workers, security and legal heads, Bitcoin exchanges, regulators, bankers, fund managers and etc.

Important representatives of the Indian government are expected to be present including Ravi Shankar Prasad, the Minister for Law and Justice and Electronics and IT. PP Chaudhary, the Minister of State Law and Justice and Electronics and IT, Dr. A.S. Ramasastri, Director for Development and Research in Banking Technology and others.

Negative news can be countered by information

In recent days there has been a lot of controversy regarding the status of Bitcoin and other cryptocurrencies in India. This is the result of misconceptions and misunderstanding of what Blockchain and Bitcoin are all about.

We talked with Santosh Parashar, joint director and Head-Corporate Affairs and Capital Market Division of ASSOCHAM about the legality of Bitcoin and how this summit could help address these issues.

He says:

“I absolutely agree that in recent days there has been a lot of news about the legality of Bitcoin and other cryptocurrencies in India. Indeed, this is happening due to the lack of related know-how at different levels in the economy. A few illegal transactions that recently came into notice cannot be ignored with reference to Bitcoin and its legality in India. In our first summit organized in March 2017, nearly all such possible negatives related to Bitcoin were addressed. They were not a fairy tale but based on worldwide experiences that may or may not happen in India. Simultaneously, the investments and transactions in Bitcoin are not altogether ceasing to an end due to any such fear of legal status in India.”

Santosh further adds about learning from other countries and the role the summit is supposed to play, “The options available for India to choose from are – learning by practice, learning by mistakes or learning through others. To what extent, the cost of particular learning is affordable should be a subject matter of utmost priority. Certain countries like the US, China and Japan which had banned Bitcoin earlier and now following the trend of acceptability must have learned through mistakes. This has to be taken care of by the investors as well as the government and regulators in India because it is a matter of economic significance. In the absence of any such legal tender of Bitcoin in India, ultimately opportunity cost is foregone as there is a loss of taxes to the government. Therefore, this summit is expected to address the legal issues, applications, and implication of Blockchain Technology in the light of recent global developments happening.”

India can become a Fintech Hub

India has been known as an IT hub for more than a decade now. The contributions of India’s IT sector can’t be downplayed as the country is the world’s largest sourcing destination for Information technology (IT) industry and accounts for 67 percent of the $124-130 bln market according to ibef.

The industry also gives employment to close to 10 mln people. India can capitalize on its IT experience and recreate a similar success story in the Financial Technology (fintech) sector as well. The need though is for a better understanding of the possibilities that reside in this area and for changing perceptions in New Delhi.

The need for a conducive environment

Demonetization was followed by a push for a Cashless India where all the transactions are done digitally. In fact, if India truly does want to go digital, it will have to rely on the emergent fintech sector and try to embrace digital currencies and Blockchain technology.

Santosh points out:

“The traditional technology models used in the financial sector and sub-sectors for operations are becoming inoperative at the same cost. Hence the new cost effective and efficient technology has much scope to become handy. Fintech has gained substantial attention of traditional players in the Indian financial system. However, the participants of the fintech ecosystem require having a conducive environment of collaboration and dynamism. To build a robust fintech ecosystem, the proper mix of innovative and technical skills, CapEx, government policies and regulatory framework could drive fintech as a key enabler.”