Why Should India Regulate and not Ban Cryptocurrencies?

This isn't the first time that cryptocurrency investors in India have been alarmed.

Industry leaders are panicking as the Indian government prepares to enact a new bill to outlaw private cryptocurrencies like bitcoin and create its own authorized digital currency. They are encouraging the government to include them in the decision-making procedure. Many digital currency trading platforms have expressed their concerns, claiming that an outright prohibition will be detrimental and that enforcement is a safer way to prevent illicit cryptocurrency operations.

As per a report by the Economic Times, ICICI bank has told a few payment gateways that it will be shutting down its net banking services for merchants who are engaged in cryptocurrency trading, such as selling or purchasing.

Other large banks may follow ICICI Bank's lead, according to industry experts who spoke on the condition of anonymity to The Quint.

According to The Quint, the move of ICICI blocking transaction related to cryptocurrencies has come after a report published by Reuters on 14 March, which states that trading, mining, and holding cryptocurrency could soon be illegal in India as the Indian government is proposing a new bill that could ban all transactions related to cryptocurrencies.

According to a report by Reuters, the new Bill proposes to criminalize possession, issuance, mining, trading, and transferring crypto-assets including Bitcoin, Dogecoin, and other cryptocurrencies. The report further suggests that if this becomes law it'll make India the first country to officially make holding cryptocurrency assets illegal.

Why should India not ban cryptocurrencies?

If India follows through on a rumored cryptocurrency ban, it would not be the first time the nation has attempted to enforce currency controls. However, a ban is less likely to be effective this time and the repercussions for India's economy may be much worse. The country should not repeat the same error.

Numerous industry bodies and players are actively lobbying India's finance ministry and regulators to reconsider the total ban on cryptocurrencies, while emphasizing the benefits of their use, according to industry officials.

The Indian government should not prohibit the use of cryptocurrency indefinitely. Any complete ban on cryptocurrency will just demonstrate a lack of awareness of the technologically powerful cryptocurrency's positive effect on India's economy. Many governments are concerned about tokens because there is no centralized entity to monitor their value or oversee their exchange. The concern arises from the failure to control the cryptocurrency sector, monitor its price, or track its transfer. Governments can do all of the above with fiat currency.

Also, Finology mentioned, "Look at it from a business and employment perspective. A ban could eliminate investments in Indian blockchain startups. Venture Capital firms like Sequoia are investing in Indian blockchain startups, and banning cryptos would make them shut down and move overseas. Moreover, these over 300 Indian blockchain companies employ many software developers and also pay taxes to the government. Banning cryptos would essentially mean mass unemployment and loss of revenue for the government."