This proposed ban is giving the investors a run for their money. They are worried about what will happen if India bans cryptocurrency. The proposed plan has also brought the cryptocurrency rates crashing down with Bitcoin prices down to around Rs 34,000.
What to do if India bans cryptocurrency?
In case the Centre does ban cryptocurrency, the investors will be left with two choices: People who wish to hold their digital coins despite a ban, can move their crypto assets to self-custody wallets. The best option here is digital devices that work like micro-SD cards. This will also let them send these wallets overseas to their friends and family. Nikhil Kamath, the owner of online profit booking platform Zerodha, also expressed his concern regarding the Bill. “Is the Indian government banning cryptos? What happens to everything in circulation already,” he asked on Twitter. According to a report by moneycpntrol.com, there are 15 million to 20 million crypto investors in India. With this, the total amount of crypto holding in the country rises to Rs 40,000 crore or $5.39 Billion.
Reason behind ban of cryptocurrencies in India?
The Cryptocurrency & Regulation of Official Digital Currency Bill, 2021, will “allow for certain exceptions to promote the underlying technology of cryptocurrency and its uses”, according to a Lok Sabha bulletin released on Tuesday. In July, RBI said it was working towards its own digital currency and the Central Bank Digital Currency (CBDC). “A CBDC is the legal tender issued by a Central Bank in a digital form. It is the same as a fiat currency and is exchangeable one-to-one with the fiat currency. CBDC is a digital or virtual currency, but it is not comparable to the private virtual currencies that have mushroomed over the last decade. Private virtual currencies sit at substantial odds to the historical concept of money,” RBI deputy governor T Rabi Sankar said. The RBI has highlighted on several occasions that it feels cryptocurrencies like Bitcoin, Ethereum and Dogecoin, among many others, pose a risk to financial stability. It has also questioned its claims of market value while asking investors to not get “lured” by the promises of returns on cryptocurrencies.
Will the Indian government ban cryptocurrencies?
After the news of the cryptocurrency ban in India, cryptocurrency users are worried about their investments. There are three aspects of cryptocurrencies in the proposed Bill: “Till the time the actual Bill is presented in the Parliament, we may only be speculating given that the description of the Bill is exactly that of the 2021 February Bill, though Government’s stance has changed a lot in the interim. We request users to not panic and have patience,” said Vikram Subburaj, co-founder and CEO of Giottus Cryptocurrency Exchange. Amid this uncertainty, what will happen if the government decides to ban cryptocurrency?
Global outreach
Experts said if there will be a ban on cryptocurrency, cryptos may be transferred to global wallets. “Practically speaking, cryptos are flexible and borderless so cryptos in circulation may be transferred to global crypto exchanges presuming that India bans use of private cryptos in India. However, if direct and indirect holding of cryptos by Indians is banned by the Bill then it will kill many innovative blockchain projects being built in / from India. The only respite is expected in the third part of the Bill, where there is scope for allowance of certain activities to utilise the benefits of underlying blockchain technology. The ecosystem expects a regulatory framework in line with development in Australia and Singapore and not outright ban,” said Varun Sethi a Blockchain lawyer.
Time frame to exit
“If India proceeds to ban crypto, though highly unlikely, we anticipate a timeframe before which they must be exchanged or disposed of. Given we have more than 15 million investors in the country, we may not witness a complete ban. Most likely, many investors will continue to hold their portfolios anticipating a future acceptance or for trade in international markets. On a global scale, the impact is likely to be minimal,” said Subburaj.
