The Indian government is closer than ever to enforce a blanket ban on cryptocurrency trading, mining, and investments in the country. This will include the much-talked Bitcoin as well as other popular cryptocurrencies.
The cryptocurrency ecosystem and technology evolve quickly in many countries. Moreover, the crypto industry has also generated lots of job opportunities for legal, compliance, tech, business development, marketing, finance, etc. in India.
However, India is expected to follow in the footsteps of developed countries such as the USA, Japan, UK, Australia, and more. In addition, for a long time, India has been on the fence while most of the developed countries have accepted and introduced new regulations.
The Indian government has been finding ways to protect crypto investors. Even more, India might face many consequences from the crypto ban in India. More so, the question here is “Will India ban cryptocurrency in 2021 or not?” Let’s discuss more.
India’s Struggle with Crypto
In December 2013, for the very first time, the RBI had forewarned the crypto investors about the cryptocurrency risks. Moreover, RBI said that their value is a matter of theory and not underpinned by an asset or good. Since then, things have changed significantly.
On April 6, 2018, RBI delivered a circular banning bank from dealing with crypto and crypto-firms. The circular added that the services include maintaining accounts, registering, trading, clearing, settling, providing loans against virtual tokens, accepting them as collateral, opening accounts of exchanges dealing with them, and transfer of money.
On February 28, 2019, the Finance Ministry committee recommended a ban on cryptocurrencies. And also suggested that India needs to develop a digital rupee. More so, it also drafted a bill banning all crypto-related activity in the country.
This year, during the Budget session of Parliament, the Indian government introduced the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021. Moreover, RBI also suggested that it is planning to bring a digital version of the Indian Rupee.
In addition, the Finance Minister further explained the government’s stance against cryptocurrency with her response in the Rajya Sabha.
Nirmala Sitharaman said,
A high-level Inter-Ministerial Committee (IMC) constituted under the Chairmanship of Secretary (Economic Affairs) to study the issues related to virtual currencies and propose specific actions to be taken in the matter recommended in its report that all private cryptocurrencies, except any virtual currencies issued by the state, will be prohibited in India.
Minister of State for Finance Anurag Thakur also delivered the concerns around the ability to regulate these currencies. Anurag mentioned that digital currencies are neither currencies nor assets, placing them outside the direct regulatory ambit of RBI or the Securities and Exchange Board of India (Sebi). More so, the government will bring a bill on the subject.
Will India Ban Cryptocurrency in 2021?
India is finally getting ready to complete a ban on crypto investments. Will India Ban Cryptocurrency in 2021? As per, the Cryptocurrency and Regulation of Official Digital Currency Bill 2021, it proposed a complete ban on all private cryptocurrencies in the country.
Moreover, all the existing cryptocurrency investors will have a 3-6 months transition period. More so, this is when the investors can liquidate their holdings.
“Cryptocurrency isn’t fiat currency backed by the Reserve Bank of India and its usage in all forms will be banned through the new law that will be introduced in Parliament,” according to an anonymous senior Finance Ministry official.”
CEO of PAC Global tweeted his dismay in this matter,
India banning #cryptocurrencies is crazy.
You can’t stop this movement. Learn to adapt.
— David Gokhshtein (@davidgokhshtein) February 13, 2021
Moreover, this would involve a ban on transacting directly through foreign crypto exchanges. However, the ban will not be enforced overnight. Cryptocurrency investors will be given a few months’ transition period after the implementation of the new law.
Furthermore, this recent ban will likely affect over 7 million Indians who hold cryptocurrencies worth more than $1 billion. Even more, it is worthy to note that India is one of the most active crypto communities in the world, being the second-largest Bitcoin nation in Asia.
Indian Exchanges Launch Campaign to Avert Crypto Ban
The Indian crypto industry has found solid growth. This is since the Supreme Court overruled the RBI’s banking ban on cryptocurrency firms in March 2020. As a matter of fact, cryptocurrency exchanges in India are anxious about the government’s decision.
Furthermore, cryptocurrency fans did not warmly welcome the government’s current plan. In addition, the #IndiaWantsBitcoin campaign has been initiated in response to the government’s plan to ban cryptocurrency.
However, the campaign is being shared across social media, with supporters tagging friends and asking them to do their bit. Within a day, more than 10,000 emails have been sent through indiawantscrypto.net from all parts of the country.
WazirX CEO Nischal Shetty mentioned in a tweet,
So we have a bill in Parliament around crypto.
Let’s not be afraid. We’ve been preparing for this. We’ve been pushing for regulations.
I believe this bill will be referred to a standing committee for further deliberations.
More thoughts below.#IndiaWantsCrypto
— Nischal (WazirX) ⚡️ (@NischalShetty) January 30, 2021
Shetty added that there’s a chance that the parliament will get a new digital currency bill to review. However, Shetty believes that this may help the RBI to create its own CBDC. And ban private digital currencies with some exceptions. Added to this, COINDCX Co-Founder Sumit Gupta also said that the government needs to explain what private and public digital currencies are.
Moreover, crypto ban in India could bring a severe blow to the country’s growing crypto firm. In fact, after the RBI’s ban on crypto trading, many crypto startup companies operate in a grey area. Moreover, the companies include CoinSwitch, Kuber, BuyUCoing, CoinDCX, WazirX, Giotuss, and others.
Consequences of India’s Crypto Ban
Let’s look into the consequences of India’s cryptocurrency ban in 2021. On a complete ban on crypto, the government needs to come up with a path to make the reimbursement. Moreover, in India, over 7 million crypto users currently hold assets worth more than $1 billion.
The government could not easily erase the wealth of such a large section of people in India. However, it would likely lead to an economic crisis in the country.
Currently, the crypto community consists of over 10 million HODLers, 300+ startup firms generating tens of thousands of jobs. And also hundreds of millions of dollars in revenue and taxes. More so, a blanket ban not only affects investors, but also honest businesses, the employment of thousands of people, and also the economy.
Furthermore, the right cryptocurrency regulation could push India ahead in this innovative technology. While wrong regulation such as a crypto ban in India will set the country back by a decade. Even more, India will never be able to catch up with the rest of the world. However, the country might end up losing a golden opportunity in this industry.
Crypto Investors Finds Way to Protect/Liquidate Assets
Cryptocurrency bans in India have made a huge number of crypto investors scramble. They are thinking of ways to protect or liquidate their holdings. Here are a few ways in which the crypto holders in India save their assets.
Moving to Self-Custody Wallets
One way explored by crypto investors is to shift their assets into self-custody wallets. However, this shows that investors could store their digital wealth in a hard wallet. Nevertheless, the hard wallet is a small digital device like a USB drive, microSD card, or smart card.
There are also few popular hardware wallets for storing bitcoins. These wallets include Ledger, Trezor, SafePal, and BitLox. Further, there are online self-custody wallet services provided by global companies such as Blockchain, Electrum, and MetaMask, among others.
Transfer To Friends/Family Overseas
The other way that Indian cryptocurrency investors can explore is transferring their crypto-tokens from their wallets to their family or friends living abroad. This could be made ahead of the impending ban.
However, Indian investors need to give up the ownership of those bitcoins. Once the transfer happens, the receiver of those cryptocurrencies would be liable to pay tax on those funds in their home country.
Sell And Exit
The third option is to just sell and exit. There is not much proof of any panic selling. Right now, panic selling is only among the relatively new cryptocurrency investors who started investing during the Bitcoin rally.