KEY POINTS

·        Countries are in various stages of banning, un-banning, re-banning and regulating crypto assets.

·        In the past seven years, 430 million bank accounts have been created for the under-banked. There are 45,000 chit funds (and many more unregistered ones).

·        Software technology parks (STPs) and special economic zones (SEZs) enabled the IT services boom. Creative ‘crypto export zone’ schemes can incubate clusters of excellence and create world-class financial services firms and unicorns.

Concerns about crypto assets

Investor protections:

·        Investor protection has been a top priority for Indian regulators. Crypto assets are seen as high-risk, speculative assets.

Sidestepping current regulations:

·        Some crypto assets may allow individuals to bypass securities issuance laws. That’s a potential risk to capital markets. That’s a potential risk to macroeconomic stability.

Illicit transfers:

·        Anonymous transfers of crypto assets may weaken anti-money laundering laws or combating the financing of terrorism rules. That’s a potential national security issue. Robust know-your-customer (KYC) norms are the solution here.

·        In summary, a smart regulatory approach considers both the potential upside and downside. It fosters financial innovation, safeguards investors and unshackles the Indian crypto ecosystem.

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