CoinSwitch CEO Ashish Singhal says India needs rules on cryptocurrencies

India needs to set rules on cryptocurrencies to solve regulatory uncertainty, protect investors and boost its sector, according to Ashish Singhal, CEO of CoinSwitch.

The Central Government move to tax income from them has been interpreted by the industry as a sign of acceptance by New Delhi, and the Reserve Bank of India has backed a ban on cryptocurrencies over risks to financial stability.

Users don't know what will happen to their holdings -- is the ban on holdings coming from government, not the ban, how is it going to be regulated? Singhal, a former Amazon engineer who co-founded CoinSwitch, told the World Economic Forum in Davos.

CoinSwitch, which is valued at $1.9 billion, is the largest company in India with more than 18 million users. The firm, based in Bengaluru, is backed by Andreessen Horowitz, Tiger Global and Coinbase Ventures.

He said that regulations will bring peace more certainty.

A period of cryptocurrencies prices plummeting around the world coincides with a large presence at this year's Davos meeting.

RBI has expressed serious concerns about private criptocurrencies, but Prime Minister Narendra Modi in December said such emerging technologies should be used to empower democracy, not undermine it.

In India, exchanges struggle to partner with banks to allow transfer of funds and in April, CoinSwitch and some others have disabled rupee deposits through a widely-used state-backed network, alarming investors.

While moves on taxation and certain advertising regulation had brought some relief, a lot more needs to be done, he said, adding that India should develop a set of laws.

India should put in place a mechanism for identity verification and transferring assets, while there should be norms for identity verification and reporting them to any authority if need be.

The number of investors in India's market is estimated to be up to 20 million, with total holdings of about $6 billion, while there is no official data on the size of the market.

There is a lot of regulatory uncertainty. In April, Coinbase, the largest exchange in the United States, launched in India, but halted use of a state-backed fund transfer service.

In May the move was triggered by informal pressure from RBI, according to Brian Armstrong, CEO of Coinbase.

In the interview, Singhal said that CoinSwitch has stopped so-called UPI transfers to hold talks with banking partners and make them comfortable. He said CoinSwitch is in talks with regulators to restart the transfer service.

We are pushing for regulations. He said that we can get the clarity with the right regulation.