Ajeet Khurana, Head Blockchain and Cryptocurrency Committee, IAMAI, India, says with or without banks, the cryptocurrency transactions will still happen, except that nobody will ever know. That is not good for India. Khurana was speaking at the ETMarkets Global Summit 2018.
Bitcoin is a very hot sector today all over the world including India. Where is it heading in India?
I am very happy to see that despite a very conventional mindset, a significant part of our population has given up the arrogance of assuming that money will continue forever the way it has been used. We are accepting that there is an evolution. Even now, the total number of people who are doing this in India is roughly around half a crore or 5 million. This can go in two directions. Unless the regulators did something drastic, this can only increase. There are certain intrinsic qualities about cryptocurrency which makes them very appealing to a certain category of users. If, however, the government takes a very adverse view of this, I do not know whether we would be stifling innovation in that case.
Do you see any chances of government going the other way round?
It goes this way. I am a citizen and I have earned some money and I am holding it in my bank account. After having understood the risk, if I want to buy Bitcoin, should anybody be able to tell me that I cannot do that as it is dangerous for my neighbours if I have it? At the level of purchasing or possessing, I do not see India as one of those very underdeveloped countries in the world which are banning Bitcoin. I see India in the league of countries like USA, UK, Singapore, Italy, Switzerland, etc, where at least I do not see the government taking any adverse action. There could be certain steps in the interest of consumer security. Exchanges and interfaces and wallets and people in the Bitcoin industry, have to follow certain regulations which we as a company as well as an industry totally welcome.
The latest news is that HDFC pulled out of some of the Bitcoin exchanges. They were the the last of the top private banks remaining in the Bitcoin exchange ecosystem. Is that a warning or is there any communication from the government side to the banking system to get out of it?
I have a huge amount of conviction in Bitcoins. I have seen RTI queries addressed to the Reserve Bank of India, asking them whether there was any such indication, circular notification, etc, sent to banks to withdraw banking services and the answer is a very clear no. RBI has not done anything.
Looking at banks in general, the banks have to appreciate that they are being given a monopolistic position by the regulations of this country. Only they can be banks. Like tomorrow, if I say oh this bank is offering me services, it cannot become a bank. In a grave misuse of the monopolistic powers, the banks prevent investment in a sector of the fintech industry, which is us.
If you have a bank account and you want to buy Bitcoin after knowing all the risks factors, I do not see how a bank can forbid you from doing that. If underlying assets were banned, if RBI had said Bitcoin cannot be purchased in India or the Government of India had said that, they would say this is not an asset class that you can purchase. That has not happened so for banks to take an action like this is irrational overreach and frankly very disappointing. I think they are grossly misusing their monopolistic power.
Is there any way that Bitcoin exchanges can be seen as an alternative to fiat currency? The government has made its stand very clear that it is not going to be a legal tender. Is there a way for Bitcoin exchanges to perform or to work even outside the banking system?
Bitcoin can operate peer to peer. You and I can transact Bitcoins. Banks do not come into the picture. Is this what the government wants? That infinite number of people with complete anonymity start transacting, buying, selling and there is no way to reach them? If they go with the exchange mechanism, in fact we would tell the government that the exchanges are your best friend because we can provide you all the KYC data. You give us a PAN number, we will tell you how many transactions the person has done, etc. We are recommending that let us remain within the banking system because then, everything can be tracked and there is a trail. If the banks stop allowing bitcoin purchase through them, the transactions will still happen, except that nobody will ever know. I do not think this is good for India.