The Parliament of India said on Friday that it was considering the passage of a bill that would “prohibit all private cryptocurrencies as part of a plan to launch a central bank digital currency (CBDC). The bill, called the Cryptocurrency and Regulation of Official Digital Currency Bill, is currently being reviewed as part of a budget session in the upper house of India’s Parliament.
But, can the Indian government, or any government, for that matter, really ban all non-government cryptocurrencies?
According to a recent article, Kumar Guarav, the Founder and Chief Executive of Cashaa, does not think so. In fact, Guarav told CoinTelegraph that “there is no way any government” can ban crypto completely. Still, the government can make life difficult for cryptocurrency hodlers.
“They can certainly ban the legitimate use of crypto which will only make it difficult for a common person who does not understand it to get involved in it,” said Gaurav. “However, what we understand is that the Indian government is trying to crack down on scams that are running in the name of Bitcoin.” In other words, the Indian government may not be diametrically opposed to the usage of cryptocurrencies, just the crimes associated with them.
Nischal Shetty, Chief Executive of cryptocurrency exchange, WazirX, laid out “a few scenarios of the crypto bill: 1) It may not come up in this session of Parliament, 2) It may come up but is referred to a standing committee, 3) It may come up and is passed in its current form.”
A few scenarios of the crypto Bill:
1. It may not come up in this session of Parliament
2. It may come up but is referred to a standing committee
3. It may come up and is passed in its current form
Each scenario outcome described in tweets below.#IndiaWantsCrypto
— Nischal (WazirX) ⚡️ (@NischalShetty) January 31, 2021
”[The] Road to Regulation Is Not Easy”
While Shetty described the first scenario as “the best-case scenario right now,” he also said that “we’ll need to push harder on educating our lawmakers about the pros of regulating crypto. India cannot miss this technology & value creation” that the crypto industry would provide.
Similarly, Shetty described the second scenario as a “good case” for crypto. However, the third scenario could “be a best or worst case depending on [the] bill.”
“If the bill has a ban on crypto as a ‘payment’ but allows trading and holding of crypto then [it will] Rocket,” he wrote. If the Bill has [a] complete ban then as an industry we will have to fight to get this reversed. [The] road to regulation is not easy!”
However, Shetty is confident that crypto will triumph in the end: “take a deep breath and ask yourself,” he wrote on Twitter. “Will the Government of India really make the 7 Million+ Indian crypto retail investors lose $1 Billion+ of wealth? Will they want to lose out on Crypto innovation? Be smart and take an informed decision. Do not panic.”
Like Shetty, Cashaa’s Kumar Guarav said that “we are positive that the government will come up with regulations and policies that will put control on the scams” while allowing the industry to “grow and thrive.”
Still, the government discourse on cryptocurrencies could present some problems for the industry. Previously, on January 31st, Nishal wrote that “Crypto regulation is going to be a hurdles race. We’ll encounter many roadblocks. We’ll jump over some, hit some, fall down at times. But, we’ll never give up till we reach our destination. Let’s do this together. Flexed biceps.”
India’s Love-Hate Relationship with Crypto Goes Way Back
While that may be the case, this is not the first time a proposed bill has threatened to upend the cryptocurrency ecosystem in India, or, indeed, that an Indian law has seriously stifled the growth of the crypto industry in the country.
For example, a proposed bill that was making the rounds through India’s legislative system in 2019 would have required a 10-year prison sentence for anyone that mined, held or sold cryptocurrencies. Fortunately, the bill was eventually dropped.
Additionally, last year, the country overturned a central bank-imposed ban on the formation of working relationships between banks and companies that operate in the cryptocurrency industry, including exchanges.
Furthermore, Finance Magnates reported earlier this year that India was considering placing an 18 percent tax on cryptocurrencies. In August of 2020, reports emerged that the Indian government was consulting with the law ministry, ministry of information and technology, and the Reserve Bank of India (RBI) to draft a framework that could be used to ban cryptocurrency trading in India.