It's one hurdle after the other for Indian crypto firms. After steep taxation norms, a shadow ban on UPI payment and scepticism from senior RBI officials, the industry's flagship advocacy platform has also been dissolved by its parent body.
The Blockchain and Crypto Assets Council (BACC) was dismantled last week by the Internet and Mobile Association of India (IAMAI). Members were informed at a meeting in Mumbai after the decision had already been made. Another source said that the IAMAI issued the statement over WhatsApp.
"The association was forced to take the decision in light of the fact that a resolution of the regulatory environment for the industry is still very uncertain, and that the association would like to utilize its limited resources for other emerging digital sectors, which make a more immediate and direct contribution to digital India, notably, deepening financial inclusion and promoting Central Bank issued Digital Currency (CBDC)," the IAMAI statement said.
However, it is reported that things had begun to go south months ago. Some members of the BACC had divergent views regarding the IAMAI's position on new tax laws implemented by the RBI and the soft ban on UPI payments enforced by the National Payments Corporation of India (NPCI).
According to an article by CoinDesk, there were a handful of "less-influential players" who saw a legal challenge as "the best way forward". However, the IAMAI was unequivocally against the idea.
What are the IAMAI and BACC?
Founded in 2004, the IAMAI is the country's only organisation that represents the digital services industry in India. It consists of more than 400 Indian and multinational corporations from various sectors such as online gaming, digital payments, FinTech, blockchain and so on. According to its website, the association is "dedicated to presenting a unified voice of the businesses it represents to the government, investors, consumers and other stakeholders."
The BACC is a body that operates under the IAMAI. Established in 2017, the goal of the BACC was to represent cryptocurrency exchanges and other firms operating in the blockchain and related spaces. The council was made up of the top representatives from the 40+ crypto and blockchain firms under its banner.
Among many other things, the BACC created a code of conduct for all crypto platforms, issued guidelines for crypto advertising, and kept in touch with the government to lobby for its interests. With the crypto industry jumping through hoops in the last few months, the BACC made multiple representations to the finance ministry, the NPCI and the government on behalf of its members.
Mounting pressure on the crypto industry in India
In the last budget, Finance Minister Nirmala Sitharaman announced that any profits made from digital assets like cryptocurrencies and NFTs would be taxed at 30 percent. The world saw it as a crypto-pessimistic move on behalf of the government. The Reserve Bank of India had also recently advised the finance minister to put a blanket ban on cryptocurrencies.
On the trading front, Indian cryptocurrency exchanges have lost more than half of their daily trading volume because of the ongoing crypto winter. In addition, confusion between the NPCI and Coinbase regarding UPI payments led to all crypto exchanges in the country withdrawing this payment mode. There have also been lay-offs across exchanges with a freeze on excessive spending. And finally, the recent implementation of 1 percent TDS on the selling of digital assets has resulted in a further decrease in trading volumes.
Is this the final nail?
While this is a significant blow, crypto exchanges are looking to take it in their stride and explore alternate solutions. One possibility is that the members of BACC will continue to operate independently from the IAMAI, a source told The Economic Times. Other participants are also exploring the possibility of joining other industry bodies like the Federation of Indian Chambers of Commerce & Industry (FICCI).
"I am anticipating that the meeting to discuss the next steps will happen sometime this week. It will either be an independent body, or we might reach out to other larger bodies," Sathvik Vishwanath, Co-founder & CEO, Unocoin told Moneycontrol.
