Reserve Bank of India is trying to flex its muscle in an area which it can’t reach, literally. It disallowed FinTechs to either trade, invest or sell cryptocurrency or initial coin offerings or ICOs There is a buzz that the government is in the process of drafting a bill banning them altogether. But the truth is that these currencies neither exist in note form nor in banks. They are virtual and traverse through a blockchain where RBI has no authority.Cryptocurrencies have fooled the law in many nations, and will continue to do so in India too.There is a strong buzz that even the government is in the process of drafting a bill on banning cryptocurrencies, The Economic Times had reported on April 26th 2019 . But in reality, crypto being a digital and virtual currency, it will continue to be in the use in market, irrespective of any regulation. ETBFSI spoke to a few industry players to find out their stand.“RBI coming up and providing Sandbox without any financial element will not make any sense. These are peer-to-peer innovations what we are experiencing globally, and require some kind of tokenisation whether it is variable token, fixed token or token on the public block chain, token on the private block chain,” said Praveenkumar Vijayakumar, Founder and CEO, Belfrics.Belfrics is a Malaysia-based cryptocurrency exchange platform which recently launched its operations in India.There are limited laws that govern virtual currency as it is not a legal tender to start with. Hence, there is no jurisdiction over them.Virtual Currency is a currency traded digitally, functioning as a medium of exchange or a store of value but it is not backed by any asset and hence, isn’t considered as a legal tender.Cryptocurrency uses cryptography to create currency and verify the transactions. Bitcoin is the largest currency in this segment right now. A few investors made 10000 % returns on their investments, and seeing this many other wanted to join the rally.Generally, the regulators in a country where cryptocurrency is legal, issue tokens. RBI has not issued any such token. Hence, the current avatar of crypto comes under the purview of a technology service than under any financial activity.Those who try to ban it should reach where cryptocurrencies exist, and that’s being nowhere as they are ‘decentralised’.“The committee is failing to appreciate that a law can only make the crypto-activity punishable but it can never control/stop the operation/use of crypto given to its decentralised nature. It cannot be eradicated from the grey market,” said Mohammed Danish, an Advocate representing Crypto-fraud victims in Indian Courts and Legal Advisor to Crypto Kanoon . Crypto Kanoon is a platform for Blockchain Regulatory News and Analysis in India.A cryptocurrency is traded like an EMI transfer. The value of such currencies is determined by each and every person who is trading, and fundamentals do not exist. Due to the lack of fundamentals that determine their value, rating agencies are staying far away from them.There is no dearth of crypto adventurers in India. According to a study, the daily volume of the crypto trade is around Rs 4 billion. There are companies offering INR-backed cryptocurrencies, too.According to Crypto Kanoon, the country now ranks sixth in the number of patents granted in blockchain space. There are approximately 10 large crypto exchanges in India with an estimated user base of nearly 5-6 million. Indian users visit international cryptocurrency exchanges 2 million times each month. Top exchanges are having a consistent daily trade volume of 50 BTC- 60 BTC. India is making a considerable push into the global blockchain patent landscape.“Mark Mobius the veteran investor in stock markets, has recently forecast that global demand for the frictionless and private transfer of value will continue to push cryptocurrencies’ development and markets. There’s a lot of innovation that’s always ahead of the regulators. It is always the case globally that regulators are laggards,” said Sanjay Mehta. Angel & PE Investor, (Investor in Cryptocurrencies)RBI has to come up with new and innovative laws to curtail this trade. They could probably use money laundering and investor protection.“In the case of crypto, the Committee appears to have in mind the similar fears. It appears to believe that the law regulating crypto will not be implementable given to its decentralised characteristic and that the government can put no operational check over it,” said Kashif Raza, Co-founder at Crypto Kanoon,Each country has its own view on crypto. Bahrain, Japan, Malaysia, Thailand, Philipines & UAE have already regulated the cryptocurrency. Countries like USA, Canada, Australia, EU, Hong Kong and many other nations have taken a positive stance on the matter of cryptocurrency.In November 2018, the Securities and Futures Commission (SFC) of Hong Kong had opened up the sandbox for centralised cryptocurrency platforms that would potentially be listing security tokens.“Crypto currencies are not banned in Hong Kong, whereas ICOs may fall under multiple regulations such as crowd funding. The regulators review crypto/ICO activity only if it falls under/breaks existing rules under the Securities and Futures Act. Having said that, the regulators have strict KYC norms to prevent AML/CFT and expect the exchanges to follow them,” said Musheer Ahmed, General Manager at FinTech Association of Hong Kong.Regulators in the world were a bit surprised when IMF Chief said that regulators need to look at crypto with an innovative approach. “I think the role of the disruptors and anything that is using distributed ledger technology, whether you call it crypto, assets, currencies, or whatever ... that is clearly shaking the system,” said Christian Lagarde, IMF chief.“In Malaysia, actually the law itself has been passed and they have recognised to asset class. And as of now in Malaysia, the exchange license is going on quite possible so they are finally listed on 20 exchanges and we are one among the 20 exchanges waiting for the licenses this year,” said Praveenkumar.“A law banning crypto would only help the miscreants as on one hand it will create dark haven for the miscreants to defraud and on the other hand the fraud victims will be seen as complicit due to which they will hesitate in seeking redressal even in case of genuine frauds,” said Danish,Investors have its expectations from regulators on cryptocurrency“I have faith in RBI as a regulator that it will pick up innovation in digital currencies as it did in P2P lending. Japan is preparing to share its experience regarding cryptocurrency regulations with finance ministers and central bank governors from other G20 countries at the upcoming summit,” added Mehta.Regulators have to safeguard consumer interest. The volatile nature of cryptocurrencies often makes it as a lucrative investment opportunity with short term gains, but sometimes genuine customers are defrauded and there’s no go to redressal mechanism.“The value of private crypto currencies (which is what is prolific right now) is a big question mark. There could be relevant use-cases but one cannot create a currency without any fundamental underlying value and it’s still not clear what is the value behind the token. Also, a number of central governments are working on e-currency backed by the state. So, in excluding crypto currency from the Sandbox, RBI seems to have adopted the wait and watch approach and see how the space matures,” said Ganesh Rengaswamy, Partner at Quona Capital.Though there are high returns, there is too much volatility in the crypto currency market all over the world, gives a reason for RBI to keep Indian customers away from crypto.“With crypto currency prices collapsing all around and well funded, ICOs going bust, regulators are justified in protecting the uninitiated end-consumer from the ravages of unregulated trade. Tech companies, however, can still use this opportunity to pitch/build permissioned, auditable solutions that are actually better than using regular databases. The opportunity is there and the time is now,” said Sanachit Mehra, CEO at Cateina Technologies, a blockchain-based fintech.Importantly, there is a strong need to educate the investors and make them aware of the virtual currency. India has seen a stag of Ponzi schemes where millions of genuine investors lost money on false promises. RBI or Government can simply, keep any instrument away which they think is not right for them, but it’s difficult for them to stop the investors who can simply access virtual currency digitally in order to obtain lucrative returns.