Crypto ban could stop innovations in India

India’s central bank (RBI) wants to ban cryptocurrencies, the government told the parliament. RBI is of the view that cryptocurrencies should be prohibited. Nirmala Sitharaman, the minister of finance in India, said that the Reserve Bank of India has expressed concerns about the “destabilising effect of cryptocurrencies on the monetary and fiscal stability of a country” and has recommended “for framing of legislation on this sector. Sitharaman reminded that the Reserve Bank of India has been cautioning users, holders and traders of virtual currencies since December 2013.

Cryptocurrencies are by definition borderless and require international collaboration to prevent regulatory arbitrage. Therefore, any legislation for regulation or for banning can be effective only after significant international collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards.

Due to the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 in the winter session of Parliament, there is panic among thousands of private players in the field. It is said the Bill will prohibit all private cryptocurrencies in India, including the most coveted Bitcoin.

Any entrepreneur who wants to create companies on blockchain will have to move outside India. A ban will also wipe out the entire asset investing class that has built up in India.

Experts say India lost out on Internet 1.0 that saw the rise of companies like Google, Amazon, Microsoft. This trend will continue if we ban crypto here, and we will once again miss the opportunity of enabling innovators to innovate such infrastructure companies in India for the world. At the same time, the crypto industry is hopeful that the government will involve the industry stakeholders while drafting the bill.

Today, India has close to 15 million crypto investors. It is the second-largest in global crypto adoption as per Chainanalysis and over $500 million in investments from marquee investors, including Andreessen Horowitz, Sequoia Capital, Tiger Global, among others.

Secondly, anyone setting up an online business in India needs to pay these infrastructure service companies to start their business. This trend will continue if we ban crypto here, and we will once again miss the opportunity of enabling innovators to innovate such infrastructure companies in India for the world.

A ban would stop all innovations in cryptocurrencies in India and it will wipe out the entire asset investing class that has built up in India. At the same time, the government is also examining the potential of crypto and blockchain in the growing needs of the Digital India that we want to build.

S Mohini Ratna, Editor, VARINDIA