• Ikigai Law’s Anirudh Rastogi represented Indian crypto exchanges in the Supreme Court case, which led to the Reserve Bank of India’s crypto ban getting quashed.
  • According to him, the ideal case would be for the government to create a self-regulatory organization (SRO) to oversee the crypto industry in India.
  • However, the matter could go to court if the government’s upcoming crypto bill is too restrictive.

India’s upcoming crypto bill has been wrapped in speculation since last week, when the government announced it would be introducing the
long-awaited piece of legislation during the ongoing session of Parliament.

The industry as a whole is hoping that the government will find the right balance so as to not restrict innovation and provide legitimacy to the sector. The lawyer behind getting India’s 2018 crypto ban quashed, Anirudh Rastogi, believes an overly restrictive stance could lead to another battle in the Supreme Court.

Rastogi represented roulette game Indian crypto exchanges including WazirX, CoinDCX and others in the appeal at the Supreme Court against the 2018 ban on cryptocurrencies issued by the Reserve Bank of India (RBI).

Short of blanket ban, these are some of the wishes that he has from the crypto ban:

  1. A self-regulatory organisation to oversee the crypto industry
  2. Sunset clauses for stringent laws
  3. A sandbox setup for crypto businesses to develop their use cases
  4. Allowance of gas fees payments using cryptocurrencies

“A blanket ban on payments would be a good reason to go to court. If I can’t make gas payments, that’s the end of a lot of businesses — how do you operate an exchange, for instance, which is built on an Ethereum or Bitcoin network without paying gas fees. This could be challenged as a violation of a person’s ‘right to trade’,” he told Business Insider.

What’s the big deal about gas fees?

Gas fees, simply put, are transaction fees. These payments are made by users to compensate the network for the computing energy required to process and validate transactions. And, they’re done during cryptocurrencies.
If there’s a blanket ban on cryptocurrencies and their use as payments, developers based out of India will face issues developing solutions based on blockchain technology.

“If the government bans use of cryptocurrency for payments, the right exceptions within that are important… Licensing for cryptocurrency based cross-border remittances would be desirable since it can make remittances significantly cheaper and faster. So allowing limited payments activity would actually be good,” Rastogi explained.

Rastogi’s wish list for India’s crypto bill

“I wish our government had taken a slightly more methodical approach towards crafting this regulation,” Rastogi said in conversation with WazirX’s head of public policy, government affairs and content, Aritra Sarkhel, during Business Insider’s webinar.

According to him, it’s not a surprise that the Indian government is not looking to recognise Bitcoin as a currency. “That has been a consistent stance taken by the government, right from Arun Jaitley’s 2018 Budget speed,” he said.

At the same time, fears persist. An overly restrictive regime could also pose a problem. “Over regulating a new, emerging technology could be deeply problematic because it’s a rapidly evolving space. And, for the government to keep pace with that and in terms of legislation is obviously going to be difficult,” said Rastogi.

Instead, he proposes that the government should lay out broad principles but not micro-manage. Other industries, like over-the-top (OTT) services and e-commerce, self-regulated themselves for a good couple of years — and the same allowance should be given to the crypto sector in India.

My ideal case would be for the government to create an SRO [self regulatory organisation], which could then lay down further guidelines on two or three specific issues — one would be investor protection and advertising.

Anirudh Rastogi, the founder and managing partner at Ikigai Law, told Business Insider

If the government does introduce more stringent regulation it should come with a ‘sunset clause’. Simply put, the strictest parts of the law should be accompanied by an expiry date, at which point they should be reevaluated.

Alternatively, the government could even set up a sandbox environment for cryptocurrency experiments. “The RBI sandbox in place today specifically bans cryptocurrency businesses, which is bizarre. Sandboxes are meant to be created exactly for these types of businesses, which are cutting-edge, less understood and have regulatory concerns — that’s why you create a sandbox,” explained Rastogi.

Questions remains unanswered

According to Nirmala Sitharaman, India’s Finance Minister, Bitcoin will not be given the status of a currency. But she did not elucidate on whether or not payments in cryptocurrencies for blockchain operations would still be permitted.

The question around whether or not cryptocurrency trade would still be permitted in the country also hangs in the balance until an official draft of the bill is brought in for public review.

The silver lining is that Sitharaman clarified that the upcoming bill is most definitely different from its previous iterations. However, it is still pending approval from the Cabinet before it can be introduced into the lower house of Parliament — the Lok Sabha — for discussion.

As my colleague Priyam likes to say, if this bill was a digital asset it would be more volatile than Bitcoin or Ethereum or anything else trading out there.

Anirudh Rastogi, the founder and managing partner at Ikigai Law, told Business Insider

Here’s the full conversation with Anirudh Rastogi and WazirX’s head of governance affairs, public policy and content, Aritra Sarkhel:

Disclosure: This conversation is part of a series on Business Insider, sponsored by WazirX.

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