Getting Clear on the Indian Crypto Ecosystem with Blockchain Lawyer Varun Sethi

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The world’s largest democracy recently held its general elections and as many political pundits had predicted, India’s mandate remained firmly with Narendra Modi’s Bharatiya Janata Party (BJP).

However, for Modi, the battle is only half-won. Emulating a stellar political performance not witnessed since the early 80s, expectations from the Modi 2.0 government are sky-high.

Will Modi 2.0 Government Deliver the Crypto Promise?

If India is to play a prominent role in shaping the next technological revolution, its government needs to ensure that the country presents itself as a global hotbed for tech innovation and offers the world a cohesive ecosystem that promotes creativity.

Among other emerging technologies, cryptocurrencies and blockchain have often been cherry-picked as the potential candidates that could light the spark to bring about a complete technological overhaul. And while the latter has received a mostly positive response from the Indian watchdogs, things haven’t been as hunky-dory for the former.

More than a year after the Reserve Bank of India (RBI) banned Indian banks from dealing with crypto businesses, things have hardly progressed at all.

Legal ambiguity surrounding cryptocurrencies, coupled with the utter lack of communication among inter-ministerial government bodies have stifled the growth of the Indian crypto ecosystem. While other south Asian countries including Thailand and Singapore have showcased a proactive approach towards regulating cryptocurrencies, the Indian cryptocurrency ecosystem remains in limbo.

To get more insight into the Indian crypto space, BTCManager spoke with Varun Sethi, an Indian lawyer who specializes in everything blockchain and cryptocurrencies.

We asked Varun about his opinion on the current state of the Indian crypto industry, his expectations for the newly christened government, factors that veered his interest into the nascent space, and a startling revelation he was able to unearth that could cast more shadow over the already bleak future of cryptocurrencies in India.

BTCManager:

What are your thoughts on the current state of the Indian cryptospace? Do you think India has fallen beyond repair when it comes to cryptocurrencies compared to other Asian countries like Thailand, Singapore, and others?

Varun:

The current Indian cryptospace seems to be filled with lots of skepticism owing to a lack of clear communication from any government department. This has resulted in ambiguity amongst the crypto fraternity.

Yet, I would say that India hasn’t fallen behind other SE Asian economies in adopting the technology since there is still adequate scope to catch up. However, the clarity in the stance of the government is expected to chart out a way ahead. There is surely adequate talent and resources along with enthusiasm in the country to accept and leverage the advantage this technology offers.

BTCManager:

Do you think the newly appointed finance minister Nirmala Sitharaman would fare any differently from Arun Jaitley with regard to crypto regulations?

Varun:

Ideally, the stance of a single minister doesn’t affect the overall working of any ministry. I thereby do not expect a see a change in the policy regarding cryptos in the immediate future. However, given a platform to have a meaningful dialogue with the government about cryptos may result in faster and better adoption of technology and clearer policy around cryptos in India.

BTCManager:

Why do you think India has been hesitant about adopting cryptocurrencies or even introducing clear regulations for that matter? The matter has been adjourned by the Supreme Court since September 2018.

Varun:

It is not just India, many nations in the world are hesitant to adopt crypto regulations. Though in the past year or so we have seen change or softening of stance from Australia, Singapore, Germany, to Qatar in the matter of cryptos. It remains a relatively new technology which is yet to be tested on the parameters of public good for mass adoption.

Though with the adoption of policies in other countries with Japan leading the way, there is surely scope for India to adopt a policy for better leveraging the advantages of this technology.

BTCManager:

Being a lawyer, what steered your interest towards cryptocurrencies? How do you think it could impact the Indian law industry?

Varun:

I have always been intrigued by technology since my early days. Had I not been a lawyer, I would have surely been doing something in the tech field. Crypto assets, in my opinion, are a new asset class and need to be looked beyond the traditional lenses of existing law since it has the ability to disrupt human behavior towards how we transact with each other in current monetary terms.

From a legal perspective, I can confirm I get lots of interest from young lawyers and students who want to explore this space. With around 1.2 million lawyers, about 950 law schools, and roughly 400,000 to 500,000 law students in a country with more than 50 percent of the population below the age of 25 and 65 percent population below the age of 35, I am sure the best is yet to come since we are fast adopting technology in our day-to-day lives.

We surely have the framework to adopt the technology, but a push from the government needs support from the fraternity to better leverage the advantages this technology and remain aware of the risks associated.

BTCManager:

You recently filed an RTI with the Reserve Bank of India. Can you walk us through some of the key findings you stumbled upon?

Varun:

The recent RTI filing with RBI resulted in four key findings:

a. RBI has not communicated or has got any communication from any other government department in the matter of proposed draft of Banning of Cryptocurrencies and regulation of official digital currencies bill 2019.

b. No RBI officer is part of the committee that is expected to draft such bill if any.

c. RBI does not deny or accept that Economic Times had access to inter-ministerial minutes of meeting as part of communication for the drafting of such bill.

d. RBI has forwarded queries regarding what are “official digital currencies” as stated in the Economic Times article dated April 26, 2019, to the Department of Economic affairs since it did not have any such information.

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