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Cryptocurrency ban will be unprecedented, govt bitcoin defeats purpose, say experts

The government’s stand on cryptocurrency has confused stakeholders in the industry, as some of the arguments forwarded by them, defeats the very purpose of the currency.

In response to a question in the Rajya Sabha, Finance Minister, Nirmala Sitharaman, said that while an Inter-Ministerial Committee will study the issues and launch a new crypto bill, all private cryptocurrencies, except any virtual currencies issued by the government, will be prohibited in India.

Last week, the government’s stand was said to be changing to regulate instead of imposing a ban on cryptocurrencies, but the possibility of an embargo has spooked many in the ecosystem.

Sitharaman reiterated the government’s position spelled out in its 2019 Union Budget speech, which had said,  “…that the government does not consider cryptocurrencies legal tender or coins and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system.”

However, many experts believe that a bill banning cryptocurrencies is unlikely. To be sure, the current proposal has not been cleared at the Union cabinet level and will not be tabled in the Parliament till it is cleared, following which it will also be referred to a parliamentary standing committee.

“Cryptocurrency can’t be banned until and unless it is totally controlled by a single organization, which in case of bitcoin, Ethereum and other major crypto, is not possible. In my opinion, the government should look at regulating this industry comprehensively so that users can be secured from scams and other illegal schemes,” said Shivam Thakral, founder and CEO of BuyUCoin, a cryptocurrency exchange.

For him, “Digital Assets like Bitcoin are not controlled or issued by any single entity hence there is no single owner of Bitcoin. In essence, therefore, it’s not possible to ban a ‘piece of code’. I think a ban is unlikely, but if it does happen, I hope they will at least give some time for existing investors to exit their position in cryptocurrency to safeguard their interest.” That’s what a lot of stakeholders in the industry are fervently hoping for, in the eventuality of a ban being imposed.

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