Bitcoin Regulation

India is Preparing a ‘Banning of Cryptocurrencies’ Bill

Osato Avan-Nomayo · @OsatoNomayo | Apr 26, 2019 | 05:00

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Bitcoin stakeholders in India are decrying the decision by the country’s central bank to exclude cryptocurrency-related businesses in its recently released regulatory sandbox for fintech firms. Meanwhile, reports have emerged that the government is looking to ban cryptocurrencies entirely.

RBI Bent on Stifling Bitcoin Growth in India

Speaking to BusinessLine, Nischal Shetty, CEO of WazirX – an Indian peer-to-peer (P2P) crypto exchange, said the Reserve Bank of India (RBI) was being unfair to cryptocurrency businesses.

According to Shetty:

A sandbox would have helped Indian entrepreneurs participate more freely in building blockchain-based applications.

The WazirX CEO berated the RBI for being obtuse about cryptocurrency and blockchain technology. Earlier in April, the RBI released its draft proposal for a fintech regulatory sandbox excluding cryptocurrencies but made provisions for blockchain-based startups.

Shetty opined that the RBI is apparently under the false impression that blockchain is the technology that underpins cryptocurrencies.

Such reasoning is akin to saying exhaust fumes are the underlying technology behind automobiles or as Shetty puts it:

Without crypto, public blockchain projects cannot be built. So, this sandbox is practically useless for all public blockchain projects.

Other critics like angel investor Sanjay Mehta believe the RBI is going about Bitcoin regulation the wrong way. Instead of banning Bitcoin-related activity, Mehta says the RBI should be encouraging crypto startups to pursue licensing and registration for their businesses.

A few cryptocurrency exchanges have already shut down operations in the country. Banks have even reportedly closed the accounts of customers involved in Bitcoin trading.

Blanket Bitcoin Ban Imminent

In a related development, reports indicate that the country’s government is looking to enact a blanket ban on cryptocurrencies.

According to The Economic Times (ET), inside sources at the government say there is already a bill under consideration among several government departments.

The bill titled “Banning of Cryptocurrencies and Regulation of Official Digital Currencies” could spell the end of cryptocurrency business in the country – and force it underground.

Reports suggest that several government agencies have already backed the idea of a blanket ban on crypto.

The ban will reportedly cover trading, sale, and issuance of all forms of virtual currencies. However, with elections due in May 2019, progress on the matter might be delayed.

ET notes that several government agencies say cryptocurrency forms a conduit for the movement of dirty money. Thus, an interim order is being considered that would see business activity involving Bitcoin and other cryptos banned under the country’s Prevention of Money Laundering Act (PMLA).

Earlier in the year, some lawmakers in the country revealed that the government’s apathy towards Bitcoin stemmed from fears of cryptocurrencies destabilizing rupee monopoly.

Do you think a blanket ban by India would have even less of an effect on the market that China’s? Let us know your thoughts in the comments below.

Images via Bitcoinist archives, Shutterstock