There is a method to the madness in the way the government decides to function. It has a peculiar way of arm-twisting when it wants something done in its favour. Historically governments are known to work for their self-interests. It would be mistake to believe they work for us.
RBI’s circular basically mandated a total ban on banking services to cryptocurrency exchanges in India because these exchanges operate outside of RBI’s regulation. It cannot touch them or their operations under any of the existing laws.
The mandate has pushed us back to the pre-exchange era when P2P models worked abundantly and largely on crypto-for-cash basis.
Fact is that thousands of people from India have made a ton of money trading cryptocurrencies. It’s true that many even have profited from it over a longer time frame. Not everyone in this space enters it with legal sources of income and that a valid concern. But the political parties in India are also mostly funded via illicit sources of Income.
The Indian politico hardly makes decisions without any self-interest and one cannot help but ponder how cryptocurrency benefits politicians. It’s another way to clean your dirty money!
Under 2% of the people in India pay taxes on their income and a large majority of the country operates on cash. Cryptocurrency has been a haven for tax evaders. You cannot deny this.
Ofcourse, Indian exchanges where KYC is mandatory are not party to evasion of taxes but p2p channels have always existed where illicit money can be converted back to legally taxable income. Infact you can buy crypto with cash and with legally via exchanges. Before the FUD, Indian exchanges account for nearly 10% of the global trade, now it doesn’t even make a dent!
RBI didn’t intervene for the longest period of time and in this duration a lot of vested interests have certainly managed to keep the market unregulated to favour themselves.
It’s quite possible that RBI was forced to take this step without any due diligence as anyone looking to convert black money to taxed income would’ve done it by now.
While my opinion may seem like speculation, it is indeed based on some understanding of the how the political bureaucracy works in this country. It’s plausible that this theory may even hold some water!
Whatever maybe the case, we’re 4 days away from the next supreme court hearing. It’s mid-July and there is no sign of the initial draft on the regulations just yet.
What do you think about this and what do you expect from the regulations? Will it favour end users or the government?
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