Banning cryptocurrencies is not a solution, experts say

New Delhi: All eyes are on the Cryptocurrency and Official Digital Currency Regulation Bill, 2021 which will be presented in the Winter Session of Parliament starting next week. At a meeting chaired by Prime Minister Narendra Modi on November 13, he pointed out the issue of non-transparent misleading cryptocurrency advertising. Highlighting the fact that “unregulated” markets cannot be allowed to become avenues for “money laundering and terrorist financing”, a major concern and issue for the government was how the country’s young people are. misled and that promising, non-transparent advertisements appeal to young people. . In the craze for easier money and a better future, young people are in fact being led to a bleak future. But the government is also aware that this is an evolving technology and that the actions taken by the government will therefore be progressive and forward-looking. The RBI continues to criticize cryptocurrencies, saying they pose serious threats to the country’s macroeconomic and financial stability. While the details of the said bill are not known, the 2021 bill seeks to ban all private cryptocurrencies in India with a few exceptions to promote the underlying cryptocurrency technology and its features. uses. The bill also seeks to “create a framework facilitating the creation of the official digital currency to be issued by the Reserve Bank of India.”

While there is a lot of noise about whether or not the Indian government will ban cryptocurrencies, global experts say the ban is not the solution and that more regulations on crypto transactions, the legal framework and sanctions against fraudulent activity will help.

The Sunday Guardian talked to experts to know the views on the same. Anndy Lian, Intergovernmental Blockchain Advisor and Investor and President of BigONE Exchange, which is a global digital asset, says: Benefiting from the use of cryptocurrency to send and receive money around the world, up to earn money playing blockchain based games such as Axie Infinity. As a government, we cannot stop the movement towards decentralization. With India’s crypto adoption ranking second globally in the recent 2021 Global Crypto Adoption Index, the move appears to be hurting not only individuals but large corporations as well. Compared to Vietnam and Pakistan, the country has a significantly higher share of large institutional investors, suggesting that Indian cryptocurrency investors are part of larger and more sophisticated organizations. Banning cryptocurrency as part of a broader strategy to deploy its own central bank digital currency (CBDC) will therefore seriously undermine the country’s crypto and blockchain business community, the crypto industry. in India currently experiencing over 100% month-over-month growth. growth, despite the government’s alleged desire to foster innovation in the blockchain sector.

New Delhi-based cyber law expert Virag Gupta said, “As crypto spreads like wildfire, there should be no delay in its regulation. The delay in passing a law has given some exchanges an opportunity to create a parallel cryptocurrency empire. Cryptocurrency and Bitcoin scams have surfaced and regulation is needed. He also said that it is a misconception to believe that a conducive regulatory environment will harm the cryptocurrency industry. On the contrary, to cement a certain future, detailed case law delving deep into money and technology is essential. “Taking advantage of a void regulatory framework around crypto, the industry’s ‘self-proclaimed divine men’ created their own regulatory mechanism and their own code of conduct that put India’s legislative system in a bad light for the world. The bigger question now is: how does the government plan to levy and recover taxes on money earned from crypto exchanges and applications? If it is treated as a capital gain, then the players get an unfair advantage and if it is treated as business income then the whole illegal system becomes legal, “Gupta said, adding:” In the proposed law, if cryptocurrencies are not accepted as legal. call for tenders, how will it be treated as an asset class and who will be its regulator. The non-levying of the GST in various layers of its transaction and the non-imposition of tax on income with ent penalty result in a huge loss to the revenues of the state and the central government.

Hayden Hughes, CEO of Alpha Impact, a social trading platform, said that like other central banks around the world, the RBI has “fears” of losing control over monetary policy and is seeking to push quickly a central bank digital currency while slowing down traditional cryptocurrencies. . “The RBI has been fighting the Supreme Court over the fate of cryptocurrencies in India since 2018, in a ban that was ultimately overturned. The thesis is that if the adoption of a CBDC can take place, the threat will be mitigated. While it is clear that there will be restrictions, the latest version of the bill has not been made public. There have been explicit references to “exceptions” in the bill, and the devil will be in the details. Even though there is a total ban on cryptocurrencies in India, one only needs to look to China to see that companies would immediately relocate their operations. Only onshore crypto companies would be affected. Bitcoin and cryptocurrencies are, after all, decentralized, which means they cannot be closed. If China can’t shut down crypto, neither will India. “

Aliasgar Merchant, Developer Relations Engineer at Tendermint, which is the main contributor to Cosmos SDK with flagship products such as Starport and Emeris, said: “A blanket cryptocurrency ban will negatively impact the economy. Indian. Besides the immediate effects such as the decline in value, institutions working on cutting technologies such as blockchain will lose confidence and ultimately there will be a brain drain. While I recognize the potential abuse of crypto, the government should focus on regulating crypto rather than a blanket ban on crypto. This brings us to the question: will people stop investing in crypto? Decentralized exchanges like Emeris, Uniswap, etc. could be used, which ultimately defies the purpose of a ban. This is very similar to the ban on alcohol in a state. Those concerned are smuggling the spirit, which ultimately costs the government millions in taxes. “

With millions of Indians invested in cryptocurrencies with holdings totaling billions according to industry estimates, many are worried about the future. At the same time, many believe that this is an opportunity in the hands of India as a country to show others the way to the crypto world and it will be interesting to see how India seizes this opportunity.

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