Should Cryptocurrency Be Banned In The Country?

Kakali Das

The month of November, seemingly is not auspicious for money. 5 years ago, demonetisation was announced in this month, and the entire mass of people lined up at the ATMs. And in this November, the news of digital note ban is making the headlines. A new bill, the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, in this winter session (started in November 29^th), will be labelled. The talks of private crypto ban started. According to a report by The Times Of India, the government will move bill to prohibit all private cryptocurrencies.

If true, it will have repercussions for everybody. People are already selling, and the crypto market is down. Crypto prices crash after centre plans bill to bar private cryptocurrencies. Bitcoin, Ethereum, and other cryptocurrencies have fallen in value. Exchanges like WazirX crashed because of panic selling. India’s largest crypto exchange crashes as investors scramble to exit. The situation is not under control.

What is the reason behind the sudden decision to ban cryptocurrency in the country? What is private or public crypto? Can crypto even be banned? Why do we tend to fear advanced technology? Will it help us in becoming a superpower?

The most controversial line in the now released notice by the government is – “The consideration to ban all private crypto currencies…” Now, the confusion is – what is this private cryptocurrency all about? Many people are considering NASAQ definition like they do in America. According to NASAQ, the currency that runs on open block chain – and traceable to some extent – is called Public Crypto, such as, Bitcoin, Ethereum etc. Other crypto currencies use stealth mode to avoid getting traced or tracked, such as, Monero, Zcash etc.

But, what if NASDAQ definition isn’t accepted by the Indian government? As per one 2019 government report called, Committee to Propose Specific Actions to be Taken in Relation to Virtual Currencies stated that any crypto not issued by government will be considered Private Cryptocurrency. So, a huge debate has erupted whether or not Bitcoin and Ethereum will survive in the country. The sources claim that there won’t be a ban and that crypto currencyis here to stay.

But, people have already suffered losses due to the incoming news and policy indecision. Do you remember the time, in 2012, when UPA government imposed retrospective taxes after losing to Vodafone in the Supreme Court? Now, what is retrospective tax? For an instance, it’s the same as your landlord increasing rent by Rs5000, but then goes on to collect increased rent for the entire past year. This seriously dented the image of investment – foreign investors feared investing, wondering what new tax might be imposed here next. Ten years later, the BJP government has abolished retrospective tax.

In 2017, the BJP government brought in GST, a unified tax structure, which was of course necessary for the country. However, the rates, the filing procedure were so complicated that, even now, the GST structure is under continuous fine-tuning. There are debates on the exemption of GST on Lassi, but not flavoured milk. GST on foot-wears increased to 12%. Small businesses have suffered due to this lack of clarity in GST.

Today, likewise, there are news about a possible crypto ban. But this policy decision should not be made with haste. The government had previously indicated to regulate the cryptocurrency market. May be, tomorrow, the government would announce no ban on crypto, but the confusion and prolonged policy indecision have caused investors to suffer. Many sold their investments at lower price. Some might buy the dip.

But, the fact here is that India has evidently slowed in adopting technology when compared to the nations like the US, Australia etc. It’s the same India where companies like Infosys, Wipro, TCS became tech-giants within a matter of years. Today, we are already behind the rest of the world in new-age technologies like Blockchain – which are technologies of tomorrow. So, banning or over regulation won’t be good.

What is in store for Crypto currency now in the country? People are still expecting that the government will allow holding selected cryptocurrencies – as taxable commodity. Bitcoin exchanges will also survive as a result, in this scenario. This seems to be a win-win situation for both entities.

Although cryptocurrencies do seem like a bubble – there are many cryptocurrencies and their rates have no regulation. Former RBI governor, Raghuram Rajan calls it ‘a classic bubble case.’ He believes that almost 12 cryptocurrencies will remain, and others will collapse. May be, the government might not agree, or they declare all activities around crypto illegal with a punishment of 10 years. But experts feel the time is up for the imposition of such punishments. If it is made illegal, exchanges like Coinswitch, CoinDCX will have to shut operations. These companies have billion dollars’ valuation. If made illegal, unemployment will rise, the companies will run to Crypto friendly nations like Singapore. Financial loss, job loss, as well as brain drain will be in surplus. Even in the worst case scenario, the government should provide window to sell crypto assets. Hope they don’t make it illegal overnight.

India’s love-hate relationship with Crypto is quite old. As you know, in 2018, crypto was banned by RBI. And why would a central bank welcome de-centralized crypto currency anyway? Crypto gives power back to the people, and the government loses it. May be, that’s the reason why bitcoin is not a legal tender anywhere in the world. In 2020, the Supreme Court lifted the ban and the country fell in love with crypto. Exchanges became unicorns. And now, in 2021, the shadow of ban has started lurking over these cryptocurrencies again.

The government is of the opinion that imposing a ban would curb corrupt practices, but people have invested est. 6 lakhs crore in crypto assets. So ban is not possible even if wanted. Nigeria, as a country did try to ban crypto, but now it is a crypto hub. On top of that, there is a decision that RBI might introduce a new currency, but why not it resolve the auto payment issues in the first place? 

Even if tomorrow an official information says – no ban incoming – we must still take policy decisions more efficiently and responsibly in the future. Investors aren’t lab rats that can be experimented on by shocking announcements and news every now and then. Pre legislative Consultation Policy 2014 states that a bill should first be available in public domain for 30 days, so that the people can send suggestions. But here, the winter session has already begun, and nobody has any clue what will happen. Because of these legislative uncertainties, there are less factories and less investments in India. There’s not an inch of doubt regarding the issues with cryptocurrency, but it should be resolved by collaborating with the investors. Banning is not the best option in digital age. We can become a superpower only by people’s participation and adoption of technology.

Besides, this tech-phobia, be it government related or personal need to be overcome! Once done with under-graduation or a post-graduation, we think we’re settled! Learning goes for a toss! Today, technologies like Blockchain and Crypto are teaching us that there is, in fact, no end to learning! And we know the burning need of such opportunities that can bring about a positive change towards employment growth in our country.