A senior Indian government official has inquired Reuters that the nation of India intends to propose a law banning cryptocurrencies. The bill would be a major blow to the industry as it allegedly would punish anyone who owns, trades, or mines digital assets, including bitcoin.
Three years ago, the Reserve Bank of India (RBI) attempted to ban cryptocurrency by preventing banks from doing business with companies in the industry. Although India’s Supreme Court dropped the ban in 2020, it now looks like a new, even tougher, ban will be proposed soon.
The high official has told us Reutersbut that the plan is to ban private crypto assets while promoting blockchain – a secure database technology that is the backbone of virtual currencies, but also a system that experts say can revolutionize international transactions, ” Reuters reported.
This coincides with recent speculation that India is considering releasing its own central bank digital currency (CBDC). This news suggests that the government understands the potential impact of digital currencies, but has yet to embrace private property such as bitcoin.
Despite this regulatory confusion, India remains a potential hotbed for Bitcoin adoption. With a population of 1.3 billion people and a widespread lack of access to traditional banking, Bitcoin could represent the unleashing of individual freedom and monetary access.
“In India, despite threat of government ban, transaction volumes are increasing and 8 million investors now have 100 billion rupees ($ 1.4 billion) in crypto investment, according to industry estimates,” reports Reuters
In addition, according to data from Coindance India has maintained a consistent LocalBitcoins volume, at 113,772,416 rupees (approximately $ 1.5 million) for the week beginning March 3, 2021. The proposed ban, while ominous, does not appear to affect transaction volume in India, at least for now.
It should also be noted that it is not realistic for a government to ‘ban’ a decentralized technology such as Bitcoin, which is free and open-source software that can be accessed and used without the approval of a third party. However, they can impose fines that make it difficult to access or use Bitcoin with ease.
As Bitcoin adoption inevitably increases in India, the potential benefits that network participants can reap will also increase. These benefits could exceed any of the benefits sought with the proposed ban.