It is known that the Indian government is not a fan of cryptocurrencies. However, a total ban would be too strict a policy for the country. As reported by Reuters' Aftab Ahmed and Nupur Anand, the bill is expected to criminalize the possession, issuance, mining and trading of cryptocurrencies. And it is no exaggeration to say that this proposal could not have come at a worse time.
Vote with their wallets
Bitcoin recently hit a dizzying peak. However, the real success story may be in what happened behind the scenes. Namely, Bitcoin has attracted the attention of both large investors and the masses. It is no longer alone in the hands of a few tech enthusiasts. Companies like Tesla, MicroStrategy, and Square have taken long-term positions.
These companies have brought "institutional credibility" to cryptocurrencies. For years, enthusiasts have been putting their money into this industry, but now that money is coming in the form of billion dollar investments. And people are taking notice. India alone has around 8 million people investing in cryptocurrencies.
In short, people vote with their wallets and have shown that they believe cryptocurrencies have a promising future. Pulling the carpet out from under them now would only punish Indian citizens for their entrepreneurial spirit. Also, undermine the network of Investors and society that has been built over the past decade will have consequences.
Government hostility has already motivated some citizens to leave for greener pastures. Rahul Jain told the Economic Times that his company has moved to Estonia so that "any Indian law to criminalize cryptocurrencies will have no impact on us." And others are doing the same. Sathvik Vishwanath said that if the bill is approved, "it will make no sense to continue our business in India".
Who will have it?
It seems the risk is too high to ignore, yet the opportunities offered by cryptocurrencies are too high to be abandoned.
Fortunately, private citizens are not alone in this struggle. A year ago, India's Supreme Court overturned the Reserve Bank of India's attempt to ban banks from trading cryptocurrencies. After weighing the arguments, the court ruled that the Reserve Bank's move was unconstitutional. However, the Indian government appears to believe that a total ban would be the easiest way to eliminate competition.
In fact, a recent Reserve Bank report noted that central bank digital currencies are attractive because they can be designed to "promote individual non-anonymity, track transactions."
While cryptocurrencies have innovated to serve users, it appears this digital currency would have been designed to serve the government. Without the ban on alternatives, it could be difficult to sell.
If the Indian government wants to launch a central bank digital currency, it encourages adoption by making it the most attractive currency on the market, not prohibiting competition and forcing its use.