The cryptocurrency users in India are worried about their investments if the government decides to ban virtual tokens. This is because the Cryptocurrency Bill has been listed for the winter session of the Parliament seeking to prohibit all private cryptos with certain exceptions to promote the underlying technology.
The proposed bill talks about three aspects of cryptocurrencies. First, creating CBDCs by the government which is the digital version of national currency. Second, prohibition of all private cryptos. Third, allowance of certain activities to enable underlying blockchain technology. However, given the description of the Bill, it is exactly that of the 2021 February Bill which sought a ban on these digital assets. Crypto experts say it will all be speculating till the actual Bill is presented in the Parliament.
“Till the time the actual bill is presented in Parliament, we may only be speculating given that the description of the bill is exactly that of the 2021 February bill though Government's stance has changed a lot in the interim. We request users to not panic and have patience,” said Vikram Subburaj, Co-founder and CEO of Giottus Cryptocurrency Exchange.
Amid this uncertainty what happens if the government decides to ban cryptocurrency?
When Reserve Bank of India (RBI) prohibited banks in 2018 from dealing with cryptocurrency exchanges, many people either flocked to sell their cryptos or transferred their cryptos to global exchanges where laws are favourable. Experts say if the ban happens the existing cryptos may be transferred to global wallets.
“Practically speaking, cryptos are flexible and borderless so cryptos in circulation may be transferred to global crypto exchanges presuming that India bans use of private cryptos in India. However, if direct and indirect holding of cryptos by Indians is banned by the Bill then it will kill many innovative blockchain projects being built in / from India. The only respite is expected in the third part of the bill, where there is scope for allowance of certain activities to utilise the benefits of underlying blockchain technology. The ecosystem expects a regulatory framework in line with development in Australia and Singapore and not outright ban,” said Varun Sethi a Blockchain lawyer.
Time frame to exit
After RBI prohibited banks from dealing with cryptocurrency exchanges existing investors were given the time frame of 3 months to exit their investments. It was also the time when many global exchanges shifted their base abroad where laws are favourable. “If India proceeds to ban crypto, though highly unlikely, we anticipate a timeframe before which they must be exchanged or disposed of. Given we have more than 15 million investors in the country, we may not witness a complete ban. Most likely, many investors will continue to hold their portfolios anticipating a future acceptance or for trade in international markets. On a global scale, the impact is likely to be minimal,” said Subburaj.
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