It has been less than a month since Narendra Modi was re-elected Prime Minister of India, but speculation is already running wild over his administration’s stance on cryptocurrencies.
Modi’s re-election gives his Hindu nationalist Bharatiya Janata Party (BJP) the parliamentary muscle to push through its economic agenda – which seems to include a total ban on financial operations related to digital currencies.
Last week, rumors arose that the Indian government is considering a bill that would punish anyone who buys, sells, trades and mines crypto assets.
The “Banning of Cryptocurrency and Regulation of Official Digital Currency Bill 2019” is the result of a year-long investigation by an inter-ministerial committee assigned to study all aspects of cryptocurrency and draft regulation on this field.
The committee is led by the freshly appointed finance secretary and former Secretary of the Department of Economic Affairs (DEA), Subhash Chandra Garg. “We will submit it to the finance minister (soon),” allegedly confirmed at an event hosted by the Associated Chambers of Commerce and Industry of India on June 6.
While BloombergQuint has recently reported that the draft is being "circulated to relevant government departments," media outlets have struggled to get any official response.
According to a Right to Information request filed on June 4, the Reserve Bank of India (RBI) has denied any knowledge of a proposed ban on cryptocurrencies.
Back in April 2018, the RBI prohibited banks and regulated financial institutions to deal or settle virtual currencies. This regulation banned trade of digital assets on local exchanges.
“Entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling VCs. Regulated entities which already provide such services shall exit the relationship within a specified time,” the RBI wrote in an official statement.
India is clearly taking the nuclear approach when it comes to finding a solution to the regulatory problem surrounding digital assets. If the draft bill is approved by the parliament, people dealing with cryptocurrencies could face a sentence of up to ten years.
The penalty could affect all those who “mine, generate, sell, dispose, issue or deal in cryptocurrencies directly or indirectly,” reported local media.
But despite the draft’s severe actions against people handling cryptocurrencies, it parallelly advocates for the introduction of a central bank digital currency (CBDC). In other words, India is forcing competitors out of its market by prohibiting every coin, expect its own.
“A decision on the launch of Digital Rupee would be taken after consulting the board of the Reserve Bank of India,” an Indian official confirmed.
India isn’t alone in the race for a government-backed digital currency. Sweden, one of the world’s most cashless economies, is already on track to launch a test programme for its e-Krona this year.
IMF Director Christine Lagarde supports the idea of CBDC and urged central bankers to explore the possibility of issuing their own digital money.
“This [digital] currency could satisfy public policy goals, such as financial inclusion, and security and consumer protection; and to provide what the private sector cannot: privacy in payments.”
As of 2019, there are nearly 6 million cryptocurrency holders based in India. While that number might seem insignificant in comparison to the country’s 1.3 billion population, it is still a lot of people. In fact, India accounts for over 17 percent of the total active cryptocurrency wallets.
The controversial draft bill represents a big threat for all of them. Luckily, there are ways to work around a possible ban without breaking the law. We’ve identified three options:
One of the beauties of digital currencies is their ability to move from A to B seamlessly and almost for free. Sending fiat money internationally could cost up to 10 percent in fees and take several days. With blockchain-based currencies, funds arrive instantly and the transaction costs a fraction of what traditional remittance services would charge.
If there is no ban on possession, a user could store multiple assets on solutions like Crypterium, and send them to family or friends abroad to perform specific financial operations.
Even if Indians wouldn’t be allowed to sell their cryptocurrencies, they would still be able to spend them. Crypto prepaid cards are a viable solution because they allow holders to use their cryptocurrencies anywhere, anytime and without anyone knowing what’s behind the plastic.
To date, the only Bitcoin card available in India is the Crypterium Card. People can order it via the Crypterium App (available for iOS and Android) and receive it in under 3 business days. This crypto debit card is also one of the most cost-efficient solutions in the market. For those subscribed to Crypterium services, the card is free and there are no monthly maintenance fees.
Another valuable attribute of this particular card is privacy. The Crypterium Card is issued by a respected financial institution in the Philippines, a jurisdiction that does not share client information with other countries… Cough-cough.
Nope. Bitcoin isn’t anonymous. But that is something you would already know if you read our article on cryptocurrency and blockchain myths. The increasing regulatory pressure and government control (not only in India) is giving a push to cryptocurrencies that offer high-encryption techniques and mixing technology. Binance’s CEO Zhao thinks the same:
That Bill in India will really push privacy coin adoption forward.— CZ Binance (@cz_binance) June 7, 2019
With Bitcoin or most cryptocurrencies out there, transactions are registered on the blockchain under a wallet address. If that address is ever linked to you, ouch. That simply will certainly not happen with Monero, for example.
This privacy coin runs on the CryptoNight Proof-of-Work protocol, a technology that relies on ring signatures to obfuscate the transactions ledger. In plain English, transactions made with this cryptocurrency are nearly impossible to track back to someone.
Did you really think cryptocurrency bans were an Indian invention? The “Made In China” label is all around it. China loves banning things — Google, Facebook, Twitter… — so why not crypto?
The Asian nation has been ‘banning cryptocurrencies’ for a very, very, very long time. Although it would be more accurate to say ‘banning and unbanning cryptocurrencies’. Just look at these headlines...
Sounds familiar, right? India is clearly flexing its muscles in the same way against cryptocurrencies. But if history is any guide, the ban will have little to no effect.
Crypterium is one of the most promising fintech companies, according to KPMG and H2Ventures. We are building a mobile app that meets the banking needs of the digital assets era.
Our goal is clear: with Crypterium, whatever you can do with traditional money you will able to do with digital assets. This idea is supported, among others, by the co-founder of TechCrunch Keith Teare and over 400,000 registered users, and the number is growing by day.
The team is led by former General Manager of Visa Central & Eastern Europe Steven Parker, and C-level executives from global financial institutions, like Renaissance Insurance, London Derivatives Exchange, American Express etc.
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