Right framework for cryptos can help balance regulation & innovation: Parl panel chief Jayant Sinha

Turning the spotlight back on the crucial meet on the future of cryptocurrencies - the parliamentary standing committee on finance has held its first meeting as the government gears up to bring a legislation in the upcoming winter session.

CNBC-TV18’s Shereen Bhan spoke to Jayant Sinha, Chairman of the Parliamentary Standing Committee on Finance.

Talking about the meeting, Sinha said, “From what we understand and what has been put out through media reports, the government is in the process of considering the right regulatory framework for crypto finance, and media reports are suggesting that there will be some legislation to that effect. Today's discussion in the parliamentary Standing Committee on Finance was because members of parliament, honourable members of the committee wanted to understand what was happening in the industry, the industry has attracted significant attention. There have been a number of media reports about how sizable the industry is and so they wanted to understand the industry landscape, what various players in the industry were doing, and what the challenges and opportunities were for crypto finance. So we invited a large number of stakeholders, and we had a very thorough set of discussions on these topics.”

On regulating the market, Sinha said, “My own personal views on this matter is I believe that every time we have these kinds of path-breaking, game-changing technologies, it is very important to balance innovation and regulation. As we look at it from a regulatory perspective, while there are many different, very powerful use cases, for blockchain, for distributed ledger technology, there are also very important challenges that we face from this game-changing technology.”

In terms of challenges and risks, he said, “The investor protection, the fiscal stability, the monetary policy, capital controls, and of course, preventing illicit finance so those are the risks. Obviously, as I said the regulatory framework that will have to get developed, will have to balance both the opportunities as well as these risks.”

On ban on cryptocurrencies he said that the committee did not come to any view of the matter.

“The goal today was simply to understand what was happening in the industry and what the challenges and opportunities are right now. Of course, individual members have their own personal views and I think some of them have expressed their own personal views. But the committee as such, has not taken a view on the matter.”

On taxation framework, Sinha said, “Today's taxation framework is very capable of handling crypto tokens and crypto finance. We have to decide of the many functions that crypto finance can fulfil where do we bucket different aspects of crypto finance, because, again, if you look at crypto finance, it can serve as an asset, it can serve as a security, it can serve as a commodity, it can serve as a payment system. Once it falls into one of these categories cleanly, and we can draw the right lines around it, then the taxation framework just plugs into place and sort of happens in a very seamless fashion. But it is very important to understand the different use cases, understand the different ways in which market participants want to use this, and then be able to draw the lines around it in a very clean, well established way.”

Talking about opportunity for India, he said, “The opportunity for us in India is that we are a leader globally on financial regulation, and what has been achieved through the India stack and particularly through UPI, where we are doing 4 billion transactions a month is extraordinary. We are absolutely the global leaders now, in fintech regulation. So I think, with the tremendous number of entrepreneurs that we have, the deep technical talent, and the outstanding regulatory framework that the government has put together, has made us a world leader. Therefore, it is very important for us to be able to harness the force of this crypto technology and enable it for our domestic users in an appropriate, balanced way.”