Indian IT giant Infosys advocates regulating crypto assets as commodities, India is considering cryptocurrency regulation rather than "catch-all"

According to the Financial Times, Nandan Nilekani, chairman of Infosys, India's second largest IT company, said that the Indian government should regulate cryptocurrency as an asset that can be bought and sold, just like a commodity. He believes that cryptocurrency investors will make a significant contribution to the Indian economy.

He explained: “Just like you own gold or real estate assets, you can also own some crypto assets. I think crypto can be used as a store of value, but certainly not in a transactional sense.”

Nilekani also said that if cryptocurrency investors were allowed to enter the $1.5 trillion cryptocurrency market, it would help "infuse their wealth into the Indian economy."

Founded in 1981, Infosys is an Indian multinational information technology and consulting company listed on the New York Stock Exchange with about 25,000 employees. The company operates in more than 50 countries. Nilekani has long worked with Indian authorities to help shape digital policies, including the Aadhaar biometric identification program. He also served as chairman of the central bank's digital payments committee in 2019.

Nilekani believes that cryptocurrencies are not suitable as a means of payment because they are too volatile. In addition, he believes that India's Unified Payments Interface (UPI) digital payment infrastructure is more effective.

The Indian government is still developing the country's cryptocurrency policy. In March this year, India held a parliamentary budget meeting, which introduced the "Cryptocurrency and Official Digital Currency Regulation Bill 2021", which aims to create a convenient framework for the official digital currency to be issued by the Reserve Bank of India, and also attempts to ban all private cryptocurrencies in India. Once passed, this will be one of the strictest anti-cryptocurrency bills in the world.

However, there are reports that the government is reassessing the bill and is setting up an expert panel to come up with new recommendations.

Last week, the Reserve Bank of India (RBI) clarified its stance on cryptocurrencies. The RBI issued a notice stating that cryptocurrency trading is not prohibited in India and that its April 2018 notice prohibiting financial institutions from providing services to cryptocurrency businesses and traders is no longer valid and should not be cited. RBI Governor Shaktikanta Das also confirmed that the bank's position has not changed and that it still has "significant concerns" about cryptocurrencies.

The Indian government has been taking action against cryptocurrencies over the past few months. Indian Finance Minister Sitharaman said the government will not close all options involving cryptocurrencies or blockchain and financial technology, but certain regulatory measures will be necessary.

How to control cryptocurrencies has always been a headache for the Indian government. Due to the lack of legal supervision, the government is worried that Bitcoin will be used for illegal activities such as money laundering and tax evasion. Regulatory agencies such as the Reserve Bank of India and the Indian Stock Exchange do not have a legal framework to directly regulate cryptocurrencies.

The strict control of cryptocurrencies is actually the result of a long-term game between the government and the market.

According to a previous report by Bitpush, as early as February 2018, the then Indian Finance Minister Jaitley stated that cryptocurrencies are illegal payment methods and intends to completely ban cryptocurrencies in India.

In July 2019, a draft law prepared by a high-level Indian government panel banned all forms of private cryptocurrencies and recommended a fine of up to 250 million rupees and imprisonment of up to 10 years for anyone engaging in such transactions.

On March 25, 2021, the Indian Ministry of Corporate Affairs amended Schedule III to the Companies Act, 2013, requiring that from April 1, listed and private companies must disclose information on their cryptocurrency holdings and other activities using digital currencies in their financial statements. This regulation applies to all Indian companies.

In addition, the Indian Ministry of Finance also intends to adjust the tax rules to make cryptocurrency transactions and corresponding services taxable, further compressing the space for digital asset transactions.

Infosys has embraced blockchain technology and offers “a comprehensive set of end-to-end blockchain services ranging from consulting, implementation, change management to operations and application maintenance.”

“I think the opportunities today are better than they’ve ever been, frankly,” Nilekani said. “In the 40 years that I’ve been in this business, I’ve never seen so much change happening so quickly.”

The Infosys chairman is not the only one who believes that crypto should be regulated as an asset in India. Last month, former finance minister Subhash Chandra Garg said that the government should regulate them as crypto assets instead of banning them.

Subhash Chandra Garg, who headed the committee that drafted the bill to ban cryptocurrencies, explained that when the bill was drafted, cryptocurrencies were more widely used as a currency rather than an asset, but that has changed. Now, cryptocurrencies are used as assets and investment tools in India, not just as a currency.