A couple of days ago, a panel commissioned to provide guidelines on how to tackle cryptocurrency in India submitted its report to the government.
In it, they suggested a total ban on all such virtual currencies in India. So what happens to crypto investors in India after all this? The future is up in the air for now.
1) Suggestions not laws
For one thing the panel, headed by Economic Affairs Secretary Subhash Chandra Garg, is only providing suggestions to the government and not laws. That means the government could possibly go in a completely different direction, and decide against a blanket ban after all.
2) Drafting a bill takes time
If a ban is the choice of action, however, it would require setting up a legal framework. After all, the reason this whole issue has taken this long to debate is because existing RBI guidelines just can’t be effectively adapted to cryptocurrency. So making crypto dealings flat out illegal in India is likely to take a few months at least.
3) Your investment is worthless if you can’t cash it
In the meantime though, investors are somewhat stuck. Banks have already been instructed to cease crypto to Rupee transactions, meaning your Bitcoin, Ethereum, etc. investments are kinda useless.
Unless you have the opportunity to transfer them to other wallets and them liquidate those funds in other countries, that money technically doesn’t exist for you, no matter how much it appreciates.
4) There’s no way to ‘ban’ possession of cryptocoin
In the event of a ban, many crypto enthusiasts say it would be incredibly hard to enforce, and indeed it would. After all, the blockchain’s defining feature is that it’s decentralized. Buying and selling cryptocoins might be made illegal, but the government has no precedent to ban their mere possession.
5) Indian crypto exchanges will be hit hardest
Additionally, in order to crack down on cryptocurrency transactions, the Indian government has to ban or block local crypto exchanges, which still leaves international ones free to transact.
And if they try to block the URLs of those exchanges, the problem is solved by a simple VPN or proxy. All in all, it’s all well and good for the government to impose a ban, but quite another matter to enforce it.
6) Investors desperate to encash will be put at risk
At the very least, cracking down on legitimate exchanges might have the adverse effect of driving investors towards shady ones, putting even more people at risk than the initial “problem” of cryptocurrency investment. Instead, perhaps the government might want to further research ways to just understand and regulate the trade, as opposed to just trying to burn it to the ground.