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Amongst all its Indian stakeholders, there are strong undercurrents, deafening official-silence and unofficial-posturing, all around. Over the past few months, the government has had its varying views & intent about crypto. The RBI has been silent about Crypto. The crypto investor community has been euphoric about the instrument and equally miffed with the Indian officialdoms behaviour. All this, when the topic of Crypto was purportedly solved last year with the Supreme Court of India lifting the RBIs crypto ban of 2018.

Concerns & common sense

Is it the common-man who buys Bitcoin? Or HNIs, or someone who understands technology and/or has surplus funds to invest in it? Should we blame Crypto-investing for lack of other attractive-investment instruments currently? Moral-placarders even compare crypto to gambling! Statistically, capital markets volatility has wiped out larger proportion of retail investors wealth in the past and could continue to do so in the future in free-markets scenario.

Another narrative fears that cryptos could be used for money laundering and terror financing. A mal-actor would have to be naive to try terror financing on an immutable ledger which can be seen and must be authenticated by all nodes on a blockchain! According to a report by Chainalysis, a company that specialises in cryptocurrency investigations for governments, exchanges and financial institutions, in 2020, the �criminal share' of all cryptocurrency activity globally fell to just 0.34 per cent ($10.0 billion value). The report also mentions that most cryptocurrency-related crimes are ransom-ware, darknet market deals, etc.

In India, traditional physical assets like real estate and gold still account for most money laundering operations and financing mal-actors. Real estate is still not covered under the Money Laundering Act while purchasing gold does not even require KYC.

Confusion galore

Of late, the banks have not been allowing crypto transactions on their gateways. The media reports speculate that the RBI "nudged" the banks to give them "cold-shoulder" treatment.

The RBI has been reportedly working on building a central bank digital currency (CBDC), using many of the properties of cryptocurrencies including the blockchain technology. A good start is that the Ministry of Corporate Affairs (MCA) had recently made it mandatory for companies to disclose crypto trading/investments during the financial year. Whenever the clarity comes through, if Cryptos were to-be treated under Law as "securities", then the regulatory control will be in SEBI's court. If it's treated as currency (doubtfully so!!), then it would fall in RBI domain. (Technically Cryptocurrencies are unviable as a currency as of now, due to the massive changes in corrections and the time it takes for a transaction to get authenticated by the various nodes on the blockchain.)

"Stick no bill" ?

Are the current "predatory" actions of the banks against the crypto-players to be seen as "appeasing their regulator"?

Is it a dereliction of commercial agreement between banks and the crypto players?

Can the affected crypto players seek redressal from the consumer grievance committees of the bank boards (chaired by independent directors)?

Can the crypto players seek SEBI's help, as most of these banks are listed-entities and the consumers as a stakeholder, have right-to-recourse for detailed disclosures, with their securities-regulator?

Can they seek help and advice of the concerned ministries under #EaseofDoingBusiness?

Ostrich-head-in-the-sand syndrome of ignoring the development of digital currencies globally will be at our own (un)doing. Economically & business sentiment-wise, the price of arbitrariness of any policy or regulatory indecision is too high. A healthier policy discussion on this topic can start with sharing the draft "The Cryptocurrency and Regulation of Official Digital Currency Bill of 2021" in public domain.