The cryptocurrency market has a huge number of followers and also many people hate it too. Especially governmental and authoritative bodies who really don’t like the cryptocurrencies work. They don’t like the cryptocurrencies decentralized and unregulated functioning system. On the other hand, the currencies are loved by the millennials because crypto is maintaining privacy, they are fast and they are not under government regulations.
Many countries have cold behavior towards cryptocurrencies and their policies such as the U.S., India, and China. Especially, India always holds strict behavior towards the virtual currency. It was also rumored in 2017 that the Reserve Bank of India (RBI) was planning to launch its own cryptocurrency much like bitcoin. They were planning to name the virtual currency as ‘Lakshmi’ (the goddess of wealth). But the idea didn’t work out because the authoritative figures don’t want to embrace the idea of virtual currency.
On the other hand, they opted for taking strong and strict actions for the people who use them and intimidate people with the policy of imprisonment who sell and buy virtual currency in the country. The government drafted a bill “Banning of Cryptocurrency and Regulation of Official Digital Currency Bill 2019” and suggested that a person who holds, mine, create, sell, transact and withdraw and use cryptocurrency will be imprisoned for 10-years.
If this bill passed in the country and become law then it will be very bad for the cryptocurrency and as well as for the people who invest, use and do their businesses utilizing them.
A statement came from Jaideep Reddy of Nishith Desai Associates and he stated,
“In our view, the draft Bill takes an extreme position since it proposes to criminalize dealing with an asset in which lakhs of people have invested as a legitimate economic avenue. Jurisdictions like the U.S., E.U., and Japan have found ways to regulate crypto-asset activity to mitigate the risks and promote the benefits. This has also been recommended by the G20 and the Financial Action Task Force, the global anti-money-laundering watchdog.”
He further added,
“In view of criminal penalty, Indian buyers will not be able to buy and the law does not mention anything about cross-border transfers through banking channels. Another point to note is that the definition of cryptocurrency under the draft Bill is open-ended and may need more precise wording.”
He ensured people that is just a recommendation bill made by the committee and a law passed by the government yet.
“The committee did not have technical experts on the technology. It is now up to the government to consider what action to take on the basis of the committee’s report.”
This strict actions also have actions such as migration and people are starting their cryptocurrency-related work in the countries, which has crypto-friendly environment.
Bitbns’s Growth & Marketing (Digital), Rahul Jain also said,
“As a startup from India, we always wanted to serve from India, but this recent complication has made it difficult for domestic cryptocurrency exchanges to operate their businesses in India. So, we are now Estonia-based company, and any Indian law to criminalize crypto will not impact us.”
There is a lot of tension already build up in the market due to this drafted and bill. Everyone in crypto-related business in India is worried due to this. As Shardul Amarchand Mangaldas partner, Shilpa Mankar Ahluwalia said,
“The current Bill doesn’t have a “safe harbor” for people who bought or dealt in cryptocurrency before the law (assuming the Bill is passed in its current form). While the Bill is unlikely to have retrospective effect, there is a real concern amongst investors and traders regarding how to exit their positions post the ban.”
She is also said bills don’t say anything about handling it outside the country and how the investors get rid of all holding they have. On the other hand, the HSA partner Advocates, Bharat Sharma has shown the light on the matter that what bill says about getting rid of cryptocurrency.
“All is not lost. Section 26 of the Bill is a transitional provision. It states that within a period of 90 days of the Act’s commencement, the concerned person who possesses cryptocurrency must declare and dispose of them.”
The bills will be suggested in June and targeted to impose heavy and criminal punishments on the people who hold the cryptocurrency and do anything related to them. On the other hand, the experts are saying that the move is harsh and it could also affect around 5 million people and many of the other firms related to cryptocurrency and blockchain. The CEO of crypto and blockchain-based analytic company CREBACO Global Inc, Sidharth Sogani said India will lose nearly market worth of $13 billion just cause they will pose ban of crypto. This is a huge negative impact.
India has the second-position as per the 2018 report by the developer of blockchain Dappros that has the highest number of developers of blockchain after the United States in the list. The calculation is suggesting that India has around 12,000 developers of blockchain and over million users of bitcoin or other virtual currency.
The experts also said that there are many businesses man who earns and generated the cryptocurrency legally, they also paid taxes. In this way, the government has been a part of the crypto industry as the government has imposed taxes on them. It not the mainstream of business then as capital gains. On the other hand, Reddy said,
“Broadly speaking, income tax would be paid as capital gains if the buying and selling were for investment purposes. If the trading was in the course of business, it will be classified under business income. Tax will be calculated accordingly.”
The company and the other authorized entities that have a business related to virtual currency will soon be challenged in the Supreme Court by the RBI. They will be punished as per the now drafted bill and then enacted the law. Article 21 of the Indian Constitution that states “The right to carry on a profession on one’s choice” may also not help the person who will be punished.
They are also a negative impact on the job growth in India as per CEO of Wazirx, Nishcal Shetty,
“Indirectly crypto can help create an awesome application that can contribute to good business and that can boost the overall IT industry of India add new jobs for the young generation.”
He further said,
“India will not have blockchain and crypto expertise leading to no crypto-related work reaching India.” He continued, “loss of billions of dollar worth of investment that crypto sector can potentially attract. Hundreds of jobs will be lost.”
On the other hand, Bharat Shamra ensured that rupee will be also affected ban and he started,
“ The bill does recognize concepts of digital rupee and foreign digital currency. In these cases, they are not outlawed once the Bill becomes an Act.”
While the use of cryptocurrency has become the new trend among the younger generation in India and also the authorities are also studying the currency a lot. Still, there are many issues in the understanding of the total functioning and implications of the cryptocurrency.
“The RBI circular has a lot of shortcomings due to the fact that the committee had no subject expert. The crypto industry was not a subject expert. The crypto industry was not consulted. We are always ready to help. Due to these limitations, the report wrongly makes a blanket statement that cryptocurrency is not a currency. The fact is that the crypto community does not see the as currency either. These are digital assets with very specific use cases built into the platform where they exist. They aren’t meant to be used as a currency. There is no threat to the rupee here.”
As I said earlier the ban on cryptocurrency will negatively impact the jobs in India. Also, it will negatively affect the digital infrastructure of India. There are many youngsters and people whose earnings are based on cryptocurrencies and after the law, they will become jobless. The bill also says that mining of the crypto will also be a criminal offense and many crypto experts have the same view on this that “Is being an innovator is a crime?” They are implying that this technology is proving the highest return in the 10 years than any assets.
Many of the crypto experts and businesses who are related to cryptocurrency are protesting against banning and saying this law will be impacted negatively on us. Also, they are saying it will affect the economy, jobs, infrastructure and also on other sectors. Many of the government and sectors are opting for the blockchain. Then India’s move of banning it will have a negative impact. As the first bank of the U.S. J.P. Morgan has built the virtual coin which is secured by the U.S. dollar. They announced this in February 2019.
RBI also planned to issue the digital currency backed by Indian rupee, but this idea died soon. Now they are implying the bill that will criminalize this activity in the country. On the other hand, capital funding if the blockchain sector of India is around $5.3 million. The Indian government also have many things on the stake after the ban. They should think rationally and like other government of the U.S., Japan, Europe, and China also have to think about regulating the currency.