Even as the Centre is set to go ahead with its plan to ban most cryptocurrencies in the country under a long-awaited bill, experts say decentralized entities cannot be shut down by governments and that mulling such a move will not only hurt individuals but also larger businesses.
On Tuesday, a parliamentary bulletin listing upcoming legislation included one paragraph on "The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021".
"To create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India," it read. "The Bill also seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses."
Hayden Hughes, CEO of Alpha Impact, a social trading platform, said like other Central banks across the world, the RBI is “fearful” of losing control over monetary policy and seeks to rapidly push a Central Bank Digital Currency while slowing down mainstream cryptocurrencies.
“Even if there is a total ban on cryptocurrencies in India, we only have to look to China to see that firms would immediately offshore their operations. Only on-shore crypto companies would be affected. Bitcoin and cryptocurrencies are, after all, decentralized, meaning they cannot be shut down. If China cannot shut crypto down, India won’t be able to either,” Hughes said.
Anndy Lian, Chairman, BigONE Exchange said what is needed is better regulation and education to support the estimated 15-20 million crypto investors in India, who are benefiting from using cryptocurrency to send and receive money around the world, through to earning money from playing blockchain-based games such as Axie Infinity.
“With India’s crypto adoption ranking second in the world in the recent 2021 Global Crypto Adoption Index from Chainalysis, this move looks like it will not only hurt individuals but also larger businesses. Compared to Vietnam and Pakistan the country has a significantly larger share of large institutional investors, suggesting that India’s cryptocurrency investors are part of larger, more sophisticated organizations,” he said.
He added that to ban cryptocurrency as part of a wider strategy to roll out its own central bank digital currency (CBDC) will seriously undermine the nation’s crypto and blockchain business community, with the crypto industry in India currently seeing over 100 percent growth month-on-month growth, despite the government’s alleged desire to foster innovation in the blockchain sector.
Raj Kapoor, Founder - India Blockchain Alliance and Chief Growth Officer at Chainsense LTD said the government should bring about awareness instead of banning arbitrarily and let people decide and that a forward-looking economy needs forward-thinking Governments. “Cover the bases, yes, but let us not erode them. We are world tech leaders and we should show the path to the world in the crypto policy. This is our chance - will we grab it or we see a fund flight out of our shores soon,” he said.