On the stroke of a fateful hour in 2018, the Indian people were served the news that cryptocurrency trading was to be banned. Amidst silent chaos and online protests
(#IndiaWantsCrypto#) trends on Twitter, the decision remains a possibility and in motion.
But, when will cryptocurrency be banned in India? Will cryptocurrency be banned in India?
The Blockchain technology has proven to be a huge win in the world of financial technology
and it has become a vital means of wealth creation and a great option for storing value. As at
December 2020, Bitcoin alone has witnessed a trillion transactions among its worldwide
users. It begs the question of why it must be banned by any government.
Déjà vu?
In a fast-changing world of technological innovations and breakthroughs, it has been a
possibility that certain technology may have taken a government, a people, by storm, and put
them aloof from catching up or responding similarly with the rest of the world. Therefore,
different countries respond to technologies differently. Bitcoin, among several other
cryptocurrencies, is a technology that has taken the world on a different journey, overnight.
Its history can be followed back to the groundbreaking infrastructure of a decentralized
network, and the cryptocurrency by the faceless Satoshi Nakamoto. Cryptocurrency serves
people the options of commodity, currency, utility, and security. The outright banning of
cryptocurrency in India will have its consequences for the people.
It is, however, not the first time that the Reserve Bank of India (RBI) moved to ban crypto in
the country. the RBI had initially successfully banned cryptocurrency throughout
India in 2018. This provoked a lawsuit against the RBI for which the court ruled against the
ban in 2020 on the basis that the RBI has not suffered any loss as a result of cryptocurrency transactions and the insufficient evidence to its claim of increased digital financial frauds in connection with the use of cryptocurrencies. Yes, India has been here
before. So, will cryptocurrency be banned in India? Even though sufficient official
information on the subject of the ban is yet to be published, the Budget Session of the
parliament has expressed the will to see the bill signed into law.
The Current Situation of Crypto in India has crypto been banned in India? No, crypto is legal in India, for the time being. However, the government is very much hostile towards the idea of it; hence, there is the unavailability of crypto exchanges in India as a result of the order by the government shutting down cryptocurrencies platforms. This has hampered the growth of crypto in the country. Banks are losing a lot of transactions and money they usually get from people, who can now transact without the intermediate services of banks. No government has true control over activities on the Blockchain technology on which virtual currencies are run. Therefore, the step taken by the RBI to place a ban on crypto and launch CBDC in its stead may be seen as one towards protecting national banks and enforcing government control over digital currencies.
THE CRYPTOCURRENCY BILL, 2021
Although most part of the world has welcomed this technology with open arms, adopting the
technology into their financial sectors, some countries have moved against the use of
cryptocurrencies within theirs. Countries in the latter category include China, Nigeria and
India, among others. The Indian government has only notified of its move with a Bill already
written for the parliament to effect a ban on cryptocurrency in the country. While there have
been cries and clamor against the ban, and while the lawmakers have not yet passed nor sign
the bill into law, we take a look at the factors at play to answer the question, “when will
crypto be banned in India?”
For instance, in Nigeria, the ban has been said to be motivated by the increasing use of the
financial tech in facilitating fraudulent transactions online. Meanwhile, some Nigerian
population holds the belief that actual motive cryptocurrencies played a key role in the protest known as the ENDSARS protests. No alternatives or options in place for Nigerians dealing in cryptocurrencies.
The circumstances in India are different. The new bill that might be introduced in India is most likely to be like the Chinese version, which completely bans cryptocurrency in its country, and the government creates its own digital currency. The Chinese ban came about in 2017 and had ordered exchanges on crypto to shut down. The China Central Bank bans all cryptocurrency transactions. There was also blocking of websites offering cryptocurrency services. It has over time become impossible to trade or hold cryptocurrency within China. It is, however, possible for the rich to own cryptocurrencies outside of the country. The same case may apply to India. The rich and well-traveled can own cryptocurrencies outside India, but it will become impossible for the average person to do the same.
Banning cryptocurrency in India is supposed to bring about the following changes in the
country:
1. The current crypto will be banned in India for transactions between the national banks
or other financial institutions and the cryptocurrency platforms;
2. There will be a new digital currency that will be backed by the government
and the finance ministry. It will be the legal medium of effecting digital financial
transactions like the ones done with Bitcoin, Ethereum, and other cryptocurrencies;
3. The signing of the bill will accord a short window to all crypto owners on current
cryptocurrency platforms. This window is expected to be between a span of 3-6months.
It is important to know that the full details of the bill are not known yet. It is also stated that
the bill will be requesting to halt every privately owned crypto platform with a few exceptions in order to enhance the crypto technology. This suggests a partial ban and a move in order to regulate cryptocurrency in India, rather than an outright ban.
Recent Effects of the Ban
Even though the ban is not yet affected, panic among cryptocurrency dealers and online platforms is extremely tense. People are waiting on the final outcome of the bill to decide which lines of action are next. Initially, cryptocurrency investments saw about ten percent dropped at the beginning of the announcement.
However, the news about Tesla investing in Bitcoin saw a surge in the amount of cryptocurrency holding. India also witnessed a slight increase. Investors and cryptocurrency platforms alike are also aware that any ban on the subject will not be immediate as it has been assured that there will be a transition period. This has given all parties involved in cryptocurrency in India the confidence of trading and investing for thetime being.
The hash-tags, #IndiaWantsCryptoand #IndiaWantsBitcoin lead the online protest by the
people of India who have found the development distasteful and unacceptable. There are
online campaigns flagging the hash-tag on Facebook and Twitter especially. They see the ban
as a sign of oppression by the government. Meanwhile, cryptocurrency holders are
scrambling for a way to force the government to backtrack on the proposed ban rather than
having them dissolve their holdings.
What Are The Options for Crypto Holders in India?
There are a few options for Indians holding cryptocurrency at the moment. They may seek
the option to transfer their cryptocurrency investments to relatives and friends overseas.
Friends and families who live in other countries where cryptocurrency holding is legal may
have to receive their crypto assets on their behalf. However, this option will surrender
custody and control of one’s digital asset into the hands of other people. Holders of
cryptocurrency in India may also choose to transfer their balances into self-custody wallets
which can be physical. Physical wallets for crypto are made possible on platforms such as
Trezor, Safe Pal, and Ledger. They allow digital wealth to be stored in hard wallets in form of
micro USB devices and SD cards. However, these may be tracked if the government decides
to explore the option. Ultimately, the last option is to decide to sell their bitcoin to INR and cash out into their local banks during the transition. When will
crypto be banned in India? No one knows. Will crypto be banned in India? Probably! The
question may then shift slightly to, “to what extent will crypto be banned?”
In sum, the crimes of tax evasion and financial frauds have existed even before the inception
of Bitcoin and other cryptocurrencies; therefore, banning crypto will actually not spell the
end of those crimes. Also, integrating local banks with Blockchain technology will go a
long way in improving the economic situation, and create a win-win situation for banks and
crypto users. Instead of the ban, strong crypto regulation will be more favorable to all
parties involved. And if a government wants to help improve the living standards of its people,
banning technology that is giving financial ease to people should not be an option. Crypto
is indeed a chance to evolve. India should not be left out. It is then obvious that the government should look at the benefits of crypto, hence, the statement that privately-owned platforms with some exceptions. This is to enhance the growth of Cryptocurrency technology. One may be tempted to conclude that the coming action isn’t a total ban, but an action to regulate.
Conclusion
The best thing for the India government is to regulate the ban on the cryptocurrency exchange and not placing a ban on any of the platforms, it can be seen that the crypto world has really helped the India economy in building it, so why will the government ban the cryptocurrency. When will crypto be banned in India should not even be in the thinking of anyone, the only way is to regulate.