It is no longer news that the India plans to place an outright ban on cryptocurrency. However, what is clear is that the implementation of the ban is no tea party. Therefore, the government cautioned that it would take a tough line on anyone caught dealing in cryptocurrency or its ilk.
Perhaps someone should remind the Indian authorities that cryptocurrency transcends geographical limitations and national jurisdiction.
Implementing the cryptocurrency ban in India is difficult
There are currently ten cryptocurrency exchanges in India with a user base of 5 to 6 million. In October, India’s finance minister Arun Jaitley had an crucial meeting with industry stakeholders. At the meeting, they exhaustively discussed the possibility of banning private cryptocurrencies in India. However, experts say that the government is looking at prohibiting selling, buying and transacting in virtual currencies, thus allowing people to possess it.
The Founder and CEO of Indian crypto exchange WazirX, Nischal Shetty, provides insight into how an outright ban will be mission impossible. In his explanation, Shetty said that banning cryptocurrency possession is impossible due to the tech wizardry behind the currency. Indeed, this makes perfect sense given that cryptocurrency doesn’t depend on wallets for storage per se.
Is this alternative strategy realistic?
One way that the government of India can implement such a ban is to go after cryptocurrency exchanges. Yes, they can force the exchanges to down their shutters. Shetty also explained why the second strategy will be a bad idea.
In his view, the crypto evangelist said that the government can successfully shut down the big exchanges. However, Shetty said, the move will encourage smaller ones to spring up, and shutting them down will be difficult because nobody will be aware of their existence.
Patronage of foreign exchanges
Besides, if the government finally succeeds in blocking all the exchanges in India, crypto hodlers can still use exchanges elsewhere. To control that, the Indian government has imposed checks and balances on such transactions. But there is a little twist. Tanvi Ratna, a staffer at Incrypt, a firm the Indian government consults with on blockchain technology, explains the downside of this strategy.
Ratna said that the crypto traders will resort to peer-to-peer channels. According to the Georgetown University graduate, foreign crypto exchanges also allow their users to convert to private coins, thus making such coins untraceable.
The former deputy governor of the Reserve Bank of India, Rama Gandhi, offered a different perspective. He argued that the trader would be bearing some risks. Gandhi said that traders of cryptocurrency transactions will ultimately settle it “in real currency,” adding that the system will be able to detect such a transaction if it involves forex trading.
Achieving the desired result
In truth, there are many challenging issues in the industry. The most worrisome aspect is the dark web. But on the flip side, an outright ban will fuel these dark web vices, therefore defeating the aim of the ban.
Additionally, Incrypt suggests that the best strategy is to regulate the cryptocurrency space instead of implementing a ban.
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