India's lawmakers are proposing a ban on cryptocurrencies, and to fine anyone caught trading in the country or even holding these digital assets. In other words, they want to criminalize the issuance, possession, trading, transferring, and mining of all crypto-assets.
Honestly, this is one of the strictest policies against cryptocurrencies I have ever seen. The full contents of the bill have not been made public as yet, however, officials have made it clear that the bill would give holders of crypto assets six (6) months to liquidate their assets after which penalties will be levied.
What Does This Mean For India?
Such a blanket prohibition would be foolish on multiple levels. For one thing, enforcing the law would be even more difficult than under the License Raj. Raids once aimed at seizing dollars and gold bars would face the challenge of locating a password or seed phrase holding millions in Bitcoin. Nor can the government seize or even access the network of computers scattered across the world mining cryptocurrency and maintaining blockchain ledgers.
To enforce a ban, authorities would have to develop an intrusive surveillance system that could track all digital and internet activity in the country. Thankfully, India does not have the state capacity to pull that off. More likely, its efforts will only drive the cryptocurrency market underground.
That would almost certainly give rise — again — to an ever-evolving set of arbitrary rules imposed by the central bank and tax department, optimized mostly to extort bribes. Young coders and start-up founders would face harsh and arbitrary raids. Unlike the “smugglers” of the 1970s, some of India’s most elite and entrepreneurial workers are engaged in these new financial technologies; persecution could spur a brain drain.
It is believed that this bill is quite hypocritical and senseless because the Indian government is also working on building a framework for an official digital asset.
If this true, why are they considering banning all crypto assets? Could there be more to this than what meets the eye? 🤔
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