16 April 2021
India has been in the news for speculations on the Cryptocurrency ban. The country has been on and off about the legal status of Cryptocurrency. In March 2020, the Supreme Court had overruled the RBI ban and allowed banks to facilitate and manage Crypto transactions. But the Indian Government, currently, has been mulling a blanket ban on Cryptocurrencies.
The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 - is a bill that stated to ban private Cryptocurrencies and their usage in any form - mining, holding, and trading. The investors would be given a transition period of three-to-six months to exit. Contrarily, there are speculations that the country has been building a framework to launch its official digital currency. The Government is also working on promoting blockchain technology as the Government’s primary concern has been that Cryptocurrency isn’t a Government-administered asset.
Even though the bill has not been passed and the details about the bill aren’t clear; such a ban will take the country a step behind in innovation, technology, and economy, especially when the country has the potential, and Cryptocurrency is skyrocketing the market.
Cryptocurrency and blockchain have the potential to include opportunities and be a breakthrough revolution. If the bill is passed and the law is implemented, India would be the first major economy to make Cryptocurrency holding illegal. According to some estimates, the ban on Cryptocurrency will affect around 1 crore Indian Crypto investors, including 10 lakh Crypto traders, and over 340 Crypto startups. The worth that Indian owns assets collectively is about Rs 10,000 crore. India is one of the top countries in the Crypto league that has the potential to grow and boost the economy and be a part of this new technology phase. Banning Cryptocurrency in India or any country would put them behind from generational of the technology, and would lose technological and economical growth.
Blockchain technology has the ability to revolutionize as the Internet did. The technology is decentralized, works on a P2P consensus network, is immutable, time-stamped, tamper-proof, secure, and so forth. Wherein Cryptocurrency has the potential to bring a wave to global tech innovation and the financial industry.
The speculations also consist of the continuation of blockchain technology, but it will not help since many blockchains require a Cryptographic token to process. It will also affect the companies that utilize Crypto tokens to power their technology. Thus, it will be as absurd as banning a car company from using fuel.
The speculations involve that India is worried about Cryptocurrency replacing the rupee someday or the risk associated with Crypto. Firstly, Crypto cannot replace the rupee, since Crypto is not a legal tender. Moreover, many view Cryptocurrency as an investment factor. Yes, Cryptocurrency is volatile, and there are many risks associated with it; still, if it is strategized methodically like SIP cost-averaging strategy, it can create profits in the long run for the investor.
Nischal Shetty, the Chief Executive of WazirX tweeted on the Cryptocurrency ban.
The Cryptocurrency ban will have a wholistic effect on Cryptocurrency users or people associated. Since the investors will not be able to hold or invest in private Cryptocurrencies, it will create chaos and panic in the Indian Crypto market. Similar uncertainty is for the Crypto-based companies in India, whether they will be allowed to offer services to clients overseas. There is also unsurety about blockchain-based companies and whether they will be allowed to practice.
A ban would affect the startups and also the investors that are investing in Indian startups. It would either compel them to shut down or move overseas. This can impact the Indian investors from opportunities to grow and create a change, unlike the foreign counterparts, and deprive them of participating in this technological phase. The ban will also have an impact on the employees associated with industry-related startups.
In the event of a Crypto ban, investors may even try to find ways to shift their Crypto assets to offshore exchanges. Investors may move their assets to self-custody wallets such as Hardware wallets, SD cards, USB, and many more. The trick here is that, Indian Crypto exchanges follow the norm of KYC - Know Your Customer, the Government will be able to track down these accounts and their Cryptos. However, according to the experts, it is unlikely for the Government to pursue tracking the accounts since the agencies of the Indian Government do not have the infrastructure to execute the ban. In 2018, the SEBI - Securities and Exchange Board of India had informed the Department of Economic Affairs that the regulations were not suited for Crypto assets.
Just like many other countries that regulate Crypto than banning it; the Indian Government should also consider studying the Crypto-related regulations of each country to outline a regulatory framework rather than banning it. Thus, instead of banning Cryptocurrency, the Indian Government can form regulations on Cryptocurrency. The Government can build the following frameworks such as make the transactions of Crypto buying and selling on bank accounts, audits for exchanges, create a committee and train them, hold a strict bank accounts verification (just like passports) for Crypto users, exchange owner, and technology provider.
Many investors and Cryptocurrency-related companies are running the campaign - #IndiaWants Crypto, and have even launched a website - IndiaWantsBitcoin.org, to promote the technology and its potential. Many Indian and worldwide Crypto enthusiasts are being hopeful and optimistic about the change that the Indian Government might implement.