India must establish rules on cryptocurrencies, says CoinSwitch CEO

India must establish rules on cryptocurrencies, says CoinSwitch CEO

India must establish rules on cryptocurrencies in order to solve regulatory uncertainty, protect investors and boost its sector, according to CoinSwitch CEO Ashish Singhal on Sunday.

The federal government move to tax income from them has been interpreted by the industry as a sign of acceptance by New Delhi, despite the fact that India has backed a ban on cryptocurrencies over risks to financial stability.

Users do not know what will happen to their holdings - is government going to ban, not 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 India's main tech hub of Bengaluru, is backed by Andreessen Horowitz, Tiger Global and Coinbase Ventures.

He added that regulation will bring peace more certainty.

There is a period in which the price of cryptocurrencies is falling around the world, and there is a large presence at this year's Davos meeting.

India's central bank has voiced serious concerns about private criptocurrencies, but Prime Minister Narendra Modi said in December that such emerging technologies should be used to empower democracy and not undermine it.

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

While moves on taxation and certain advertising regulations have brought some relief, a lot more needs to be done, Singhal said.

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

There are no official data on the size of India's criptocurrency market, but CoinSwitch estimates that there are up to 20 million investors with total holdings of around $6 billion.

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

In May, Brian Armstrong, CEO of Coinbase, said that the move was triggered by informal pressure from India's central bank.

Singhal said in an interview that CoinSwitch has stopped making 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 clarity with the right regulation.