Crypto exchanges must be monitored by a body similar to Sebi and partly by RBI: Shivam Thakral, BuyUcoin

Amidst the bear phase, crypto exchanges in India faced issues from investors and law enforcement. In an interview with ETMarkets.com, BuyUcoinCEO of Shivam Tukral says that with the new tax regime, every penny in the crypto space is under the tax prism and regulations for the crypto space are the need of the hour. Edited excerpts:

The crypto market has been struggling lately. Do you think the woes will last longer than expected amid expectations of rate hikes and fears of an economic slowdown?
During the dream bull run of 2021, crypto assets provided stellar returns that have never been seen in modern human history. Bitcoin hit $69,000 last year, making headlines around the world. We need to understand that every new asset class goes through cycles of corrective phases and the trends depend on multiple factors surrounding the economy. The crypto market is going through a correction phase and it will result in a stable and mature investment ecosystem for crypto enthusiasts everywhere.

Indian crypto volumes have been hit hard since the start of the new fiscal year. Do you think investors have lost interest in the digital asset class or are they waiting for another bull run to join the party?

The second half of 2021 encouraged many investors sitting on the fence to dive into crypto assets. We have witnessed a massive increase in the number of new investors which has inflated crypto holdings among Indians. Crypto investors are loyal long-term holders who trust in the potential of crypto assets to create long-term wealth and fight inflation.

The decline in trading volumes can be attributed to the new crypto regulatory regime and also to people anticipating the next bull run.

Crypto companies, exchanges and local trading platforms have faced stringent regulatory and agency measures. What is your opinion on that? Do you think Indian stock exchanges have the mechanisms in place to ensure fair trading practices?
Indian exchanges have a big responsibility to keep crypto investors’ money safe. Most crypto exchanges follow strict KYC and AML procedures not only to comply with regulations, but also to prevent the misuse of crypto assets. After the implementation of the new crypto tax regime, all crypto transactions have come under the tax prism, and authorities can monitor and track every penny moved in the crypto ecosystem. Most of the founders who run crypto companies in India are Indian residents and easily accessible to Indian authorities and agencies, which gives some level of comfort to the government for secure crypto operation by Indian registered entities.

IAMAI recently dismantled BACC. Indian exchanges have no one for guidance or regulation. Even self-regulatory mechanisms are not sufficient for all problems. Don’t you think that in such cases it becomes difficult for other stakeholders to fully trust the industry as a whole?

BACC was a group of like-minded crypto entrepreneurs sharing a common platform to raise legitimate concerns/issues faced by the crypto industry in India. BACC members are still a strong group of passionate individuals who are working to mainstream crypto and blockchain in India.

The industry has moved from self-regulation to government-controlled regulation following the implementation of recent tax laws. Just like the stock market, crypto exchanges should also be overseen by a Sebi-like body and some parts of the regulation may be under RBI.

The formal crypto tax structure has given much-needed confidence to crypto investors in India. I strongly believe that the industry will create a much more evolved association that will function as a common industry voice on the regulatory front.

BuyUCoin has been a southern-centric exchange as the majority of the user base is from southern states. Have the trends changed now? What are your plans to increase the user base, especially in the northern region?

BuyUcoin is the second oldest cryptocurrency exchange in India with a user base spread across the country. Our user base is spread across major Indian states with a majority of investors from Karnataka, Maharashtra, Uttar Pradesh, Delhi and Haryana. However, we have seen a massive surge in users from South India due to investors buying the dip during the bearish phase.

What are the factors that can reignite crypto sentiments in India? Do you think comprehensive regulation and framework would be enough to revive the crypto market? Share your point of view.
Crypto investors in India have realized the benefits of long-term crypto investing and we have observed that new investors are also holding their crypto assets for a longer period to protect their wealth from inflation. Support from the formal banking system, ease of filing taxes, and business-friendly policies are some of the factors that can really boost the confidence of India’s strong and growing crypto community.

We must actively work to create an ecosystem where investors can trade without fear and entrepreneurs are allowed to innovate without worrying about the future of their businesses. We need to create localized venture capital funds dedicated to funding crypto startups and seasoned crypto entrepreneurs should leverage their experience to breed a new breed of crypto entrepreneurs in areas such as crypto security, Web3 and Defi.