Subhash Garg Advocates for Cryptocurrency as a Commodity in India

A New Perspective for Cryptocurrency in India

The Indian cryptocurrency market has witnessed significant turbulence over the years due to regulatory uncertainty. However, a recent suggestion by Subhash Garg, former Secretary of the Department of Economic Affairs (DEA), may pave the way for the crypto industry to take a step forward. Speaking at a webinar organized by Credit Rating for Exchanges, Blockchains, and Coin Offerings (CREBACO) and legal experts Khaitan & Co, Garg proposed that cryptocurrencies could be treated as commodities or assets rather than currencies in India.

This shift in stance could unlock new opportunities for cryptocurrency in the country while addressing regulatory concerns.

Key Takeaways from Subhash Garg’s Proposal

1. Cryptocurrencies as Commodities or Assets

Garg’s suggestion stems from the draft bill passed by the Indian government, which bans cryptocurrency from being used as a medium of exchange or currency. By categorizing cryptocurrencies as commodities or assets:

• Cryptocurrencies would not interfere with the traditional monetary system.
• The government could regulate the industry more effectively.
• Investors would gain clarity and confidence.

Garg stated:

“While I stick to what we said in the report of the virtual currencies committee, the crypto asset is anybody’s right to create. The value lies in the eyes of the holder.”

2. Protecting Investors

Garg emphasized the importance of safeguarding inexperienced investors:

“It is the government’s duty to protect the gullible people. The people who don’t understand need to be protected.”

By establishing robust regulations, the government can minimize fraud and ensure a secure environment for crypto enthusiasts.

Changing Views: From Ban to Regulation

Subhash Garg was instrumental in drafting the 2019 bill proposing a blanket ban on cryptocurrency in India. However, his recent remarks highlight a shift in perspective, signaling a more balanced approach to crypto adoption.

This change could be attributed to:

• Increased global acceptance of cryptocurrencies.
• Growing recognition of blockchain technology’s potential.
• Rising public interest in digital assets.

Support for Blockchain Technology

Garg remains a staunch supporter of blockchain technology and its integration into financial markets. Blockchain’s potential to revolutionize traditional systems aligns with his vision for modernizing India’s financial infrastructure.

Blockchain’s Potential Use Cases in India:

1. Secure and Transparent Transactions: Blockchain can eliminate fraud and ensure data integrity.
2. Efficient Supply Chain Management: Enhancing traceability and reducing inefficiencies.
3. Smart Contracts: Automating processes across various industries.
4. Financial Inclusion: Empowering unbanked populations through decentralized finance (DeFi).

Industry Reactions to Garg’s Suggestions

1. Sidharth Sogani, CEO of CREBACO Global Inc

Sogani welcomed Garg’s perspective, urging the government to embrace cryptocurrency rather than fear it:

“Don’t be scared of crypto and ban it, instead help it grow. When there is something so new, the knowledge is derived by practical experience, not by a set of books.”

2. Nischal Shetty, Founder of WazirX

Shetty noted a surge in interest during the pandemic:

“After the lockdown, people wanting to know and understand about cryptocurrencies has increased four times.”

Implications for the Indian Crypto Market

1. A Boost for Crypto Adoption

Allowing cryptocurrencies to be classified as commodities or assets could provide a much-needed boost to India’s burgeoning crypto ecosystem.

• Increased Investor Confidence: Clear regulations could attract more retail and institutional investors.
• Economic Growth: The crypto sector could contribute to job creation and innovation.

2. Potential Challenges

While the proposal is promising, it raises several questions:

• Taxation and Compliance: How will crypto assets be taxed?
• Regulatory Framework: Will India develop a separate body for crypto oversight?
• Global Coordination: How will India align its policies with global standards?

The Role of Education and Awareness

Educating the public about cryptocurrencies is crucial for fostering trust and reducing misconceptions. As Shetty noted, the demand for crypto knowledge has surged during the lockdown, creating an opportunity for stakeholders to launch awareness campaigns.

Key educational efforts could focus on:

• Understanding blockchain technology.
• Safe investment practices.
• Differentiating between legitimate projects and scams.

India’s Position in the Global Crypto Landscape

Globally, countries like the United States, Japan, and China are making strides in crypto regulation and adoption. India’s cautious approach has drawn criticism, but Garg’s suggestions could signal a turning point.

Learning from Global Leaders

• United States: Gradual adoption through regulatory clarity.
• Japan: Recognizing Bitcoin as legal tender and promoting innovation.
• China: Developing the Digital Yuan and supporting blockchain projects.

By adopting a balanced approach, India can position itself as a key player in the global crypto economy.

Conclusion: A Step Towards Progress

Subhash Garg’s recommendation to treat cryptocurrencies as commodities or assets marks a significant shift in India’s regulatory narrative. While challenges remain, this approach could unlock immense potential for the country’s crypto ecosystem.

The road ahead requires collaboration between the government, industry leaders, and the public to create a secure, innovative, and inclusive framework. By fostering innovation and protecting investors, India can lead the way in the global cryptocurrency revolution.

For more insights into the evolving world of digital finance, explore our article on the latest trends in cryptocurrency regulation, where we analyze key developments and their impact on global markets.