While the entire world is studying, analyzing and proposing to change their financial laws to open up for new possibilities brought in by cryptocurrencies, India seems to be taking an opposite stance. In April this year, the government had implemented a blanket ban on the use of cryptocurrencies and had instructed all banks to cease crypto-to-rupee transactions. This implied that all the people who had bought crypto coins imagining future riches after last years’ crypto rush are kind of stuck with it.
After months of debate, the Indian government is finally close to formulating laws on the regulation of cryptocurrency. The panel, which, has been appointed to suggest a new legal framework for the technology, has submitted its report. And the rumors regarding the details are not very encouraging for the crypto enthusiasts. The panel is headed by Economic Affairs Secretary Subhash Chandra Garg.
CNBC TV18 has reported that the panel has advised the government to draft a new set of specific laws under RBI guidelines. They have sought not to rely on outdated regulations. An unnamed source told the publication that the panel has once again echoed their earlier decision for the need for an outright ban, treating all cryptocurrency dealings as illegal.
However, it is still remaining to be seen if that is what the government does as the panel is only suggesting the government on such issues. A ban, however, would be very difficult to enforce as the defining feature of a blockchain is that it is decentralized.
Cryptocurrencies are digital currencies which operate independently of a central bank. They use encryption techniques to regulate the generation of units of currency and verify the transfer of funds. They present new challenges for the economic advisors. The present RBI guidelines just can’t be effectively adapted to cryptocurrency, and this is indeed what is causing the confusion. In such a scenario, a decision would take a few more months at the least. If at all the ban is imposed, in order to crack down on cryptocurrency transactions, the Indian government has to ban or block local crypto exchanges. This would still leave international ones free to transact, and the people would still find a way around the ban by using proxies and VPN.
But according to crypt enthusiasts, cryptocurrency is here to stay. Experts maintain that decentralized currencies are the future. Cracking down on legitimate exchanges of digital tokens might have the adverse effect of driving investors towards shady ones, putting even more people at risk than the initial “problem” of cryptocurrency investment.