Cryptocurrency startups seek regulators’ stance as Libra skips India

As Facebook’s proposed Calibra wallet will not be available in India, it will put pressure on regulators to spell out their stance on the digital currency and acknowledge its mass adoption, founders of crypto-currency startups said, as the social media giant looks to develop Libra into a global currency.
ET reported on Wednesday that Calibra would not be available locally as regulations do not permit the use of banking networks for blockchain currency transactions.
“There are no plans to offer Calibra (wallet built into WhatsApp) in India. As you may know, there are local restrictions within India that make a launch of Calibra not possible at this time,” a Facebook spokesperson told ET.
The future of cryptocurrency startups is uncertain after the Reserve Bank of India put a stop to dealing with virtual currencies using the banking network.
A draft bill, Banning of Crypto Currency and Regulation of Official Digital Currency 2019, has also sparked concern amongst crypto enthusiasts.
“It (entry of Libra) is possibly a positive in the longer term because it starts putting pressure on the government – if other countries’ citizens can use it but Indians can’t,” said Nitin Sharma, founder of Incrypt Blockchain and an investor in the space. “Also, billions of people worldwide are introduced to the concept of a crypto currency (through Libra).”
Nischal Shetty, founder of cryptocurrency exchange platform WazirX, said Facebook’s announcement will give it time to work with governments ahead of the currency’s launch in 2020 and change regulators’ approach towards the technology.
“This will push regulatory discussion in the right direction. One of the largest technology players announcing the project increases the legitimacy of cryptocurrencies and will allow mass adoption. Other big technology players may also look to get into this space,” he said.
A person aware of the developments had told ET that Facebook had not filed any application with the RBI for its cryptocurrency in India.
Sathvik Vishwanath, CEO and co-founder, Unocoin said that “given the central bank’s stance, it would not encourage an application from Facebook.”
While crypto currency transactions will not be mainstreamed and Libra may not roll out as expected, Facebook would be able to find a way around it, he said.
“Just by restricting the outflow of funds to international phone numbers, Facebook may be able to convince RBI that it is a prepaid payment instrument and operate like PayTM,” he said.
Varun Deshpande, co-founder of Nuo Network, a platform that allows users to deposit, lend, and invest in crypto currencies, noted in a series of tweets that “Libra is the best bet to explain Indian regulators the benefits of opening up further”.
He said since India was Facebook’s biggest market, the social media giant will “go to extreme lengths to comply with regulations to serve Indian customers.”