Is blanket ban on cryptocurrency possible in India; Here’s how things can change

Digital coins or cryptocurrencies have gained importance in India over the past decade. Although investors are actively investing in cryptocurrencies, there are still a lot of concerns about the trading of cryptos. Thus, to avoid all confusion, India is likely to introduce a bill in the upcoming winter session that is scheduled to start from November 29. If the bill is passed, the ban will be imposed on all private cryptocurrencies. However, investors possessing Bitcoins and Ethereum need not worry as they are public blockchain-based cryptocurrencies.

Private v/s Public cryptocurrency

What the central government meant by private cryptocurrencies is still not clear, however, likely Bitcoin, Ethereum, and other crypto tokens of this sort will not be banned as they are based on the public blockchain network. These digital coins come under public networks as they are traceable alongside providing a bit of anonymity to users.

Private cryptocurrencies like Monero, Dash among others are though based on the public blockchain network, hide the transaction information to offer privacy to the users. 

Thus, Bitcoin offers anonymity whereas Monero provides privacy to the user and is regarded as a private token.

Is a blanket ban possible?

Due to the lack of any inherent value of liquidity, it might be difficult to impose a ban on cryptocurrencies. Millions of people all across the globe can theoretically hold such a currency which can be regarded as pieces of code, where a ban cannot be made, however, can be used as a medium of exchange and which will then lend it value. Digital tokens can be called an asset, a commodity, a currency, or even a security.

Just like files are transferred from one computer to another, trading of cryptocurrencies from one wallet to another happens in the same process. Thus, a regulatory ban might not take away people’s ability to transact cryptocurrencies with one another.

Meanwhile, it is always possible for the government to create barriers and regulations to transactions and entry of such digital coins. The majority of investors trading on crypto exchange platforms will be lost if bans are imposed on these platforms as the investors are not perhaps familiar with the technical world of creating crypto wallets.

Notably, a blanket ban would force crypto exchange platforms to stop transactions of cryptos in India. Reportedly, one of the biggest crypto exchange platforms named Huobi had to do the same when China imposed a blanket ban on cryptocurrencies in September 2021. Besides, in an interview with the Financial Times, the exchange’s founder stated that its revenue from the Chinese users during the September to December quarter would be zero.

Moreover, a policy expert told Livemint that “two factions” exist within the government – a group that wants to ban crypto while another one that wants to regulate it. “But since the regulatory scenario wasn’t clear, the first group is the one that’s coming out on top.” He added, “The government may pass a money bill if it wants, which will be cleared in 14 days. Or they could also do an ordinance, which will be faster.”

On the other hand, Nischal Shetty, the CEO of WazirX – India’s largest crypto exchange platform tweeted, “The crypto regulation bill has been listed for the winter session. The description hasn’t changed much. There will be speculation on both sides. The good thing is more people within the government are aware of how crypto works.”