India is deciding on banning any trade with cryptocurrencies by passing a new bill. Other Asian economies have decided to regulate this fledgling market and thus, India has been placed out of step.
Before sending this bill to the parliament, it will be discussed by the federal cabinet shortly. This is according to some people who are familiar with this development but are not supposed to speak to the media in accordance with the rules.
Blockchain, a technology that underlies cryptocurrencies, will be encouraged by the federal government but not trading of the currency. The finance ministry of India did not respond to any calls nor replied to any messages.
In the year 2018, the Indian Central Bank had put a ban on crypto transactions after there were multiple frauds. This happened after the Prime Minister, Narendra Modi, had suddenly decided to ban almost 80% of the currency of the nation. The exchanges of cryptocurrencies had responded with a lawsuit in the Supreme Court and in March 2020 won some respite.
This win managed to prompt a surge to nearly 450% in just two months since the month of March. This revived the concerns as more Indians risk their savings amid an economic slowdown and job losses which are worse due to the coronavirus pandemic.
Regulating the Trades:
The decision of India is going to be crucial as more of the Asian countries weigh the pros and also the cons of virtual currencies. China, the rival, had banned initial coin offerings and also virtual currencies in the year 2017, allowed Bitcoin trading in the form of virtual property and not as fiat money. South Korea and also Singapore regulate the crypto trades.
Niti Aayog, the think tank of the federal government of India is exploring the uses of blockchain. These blockchains are structures that store blocks or transactional records publicly in several databases that are networked. This is to manage the supply chain of pharmaceutical drugs, land records or probably, the records of educational certificates. Though it is planning a virtual currency, the government is not at all positive with the trading of cryptocurrencies.
A trading ban that is renewed can affect 1.7 million Indians who are trading in digital assets. This can also affect a number of upcoming companies setting up the required platforms for trade.
This is also going to affect Coin-Switch, a Singapore-based company that added nearly 200,000 users after starting operations in India in June. This company was reporting huge volumes of around $200 to $300 million.
Instead of a ban what India needs is a specific regulatory framework for the protection of retail consumers who are un-informed. This can ensure adequate oversight of the RBI and the government over the businesses of cryptocurrencies. India can look for benefitting with such a regulation to attract investors and businesses of cryptocurrencies.
Nothing can be said at present and all that can be done is to wait and watch.