Supreme Court’s hearing
With the potential ban of cryptocurrency in India, stakeholders and the central bank have been debating over the issue. The reason stated by the court for the ban is the criminal activities that may adversely affected the Indian economy. Apparently the chances of money laundering are quite high when dealing with digital money. To counter this issue and that of volatility of cryptocurrency, the Supreme Court proposed its ban. Furthermore, it stated that anyone found in breach of this law would be fined and/or would be subject to penalties (up to ten years of imprisonment). The bill named ‘Banning of Cryptocurrency & Regulation of Official Digital Currency Bill, 2019 has obviously been receiving backlash from investors and miners of cryptocoins. If the bill gets approved, the Indian legislation would officially ban any mining, generating, transaction, etc. of crypocurrency. This however, would not include ‘Digital Rupee’ which is legally issued by the Reserve Bank.
Is the ban on Cryptocurrency even a possibility?
The people against this Bill have pointed out that although crimes such as money laundering do happen in the world of cryptocurrency, there are measures taken in various countries to counter such issues. Living in a world that is surrounded by technology, the overall economy is evolving at such a high speed. Keeping this in account, it may even be unrealistic to ban digital money. Why not take precautionary measures in order to safeguard the money instead of banning it altogether? Such a huge step may even turn out to be a big blow to the Indian economy. Banning Cryptocurrency due to matters such as hacking, volatility, etc. is a moot point since it can be argued that these problems are faced even when dealing with stocks, digital banking, etc. Should they be banned as well? John McAfee, a British-American computer programmer, stated that banning crypto in India is a move that cannot be enacted. The Bill simply does not stand a chance.
(McAfee however later deleted the tweets)
Regularizing Cryptocurrencies – A Better Option than Banning it?
Instead of banning crypto money, Reserve Bank of India (RBI) and the committee headed by finance secretary proposed that distributer-ledger technology (DLT) should be used. For example, Blockchain – a type of DLT – puts together the transactions into blocks and then broadcasts them. The use of DLT will aid in countering the issues that the Supreme Court is worried about. It could be used for tracking loans, detecting fraud, sorting issues of insurance management and so on. A middle ground should be looked for instead of taking such drastic measures to curb crimes in the crypto market.
Furthermore, looking at it from legal perspective, exerting such a ban is not in compliance with the RBI Act and the Banking Regulation Act.
India is not the only country dealing in cryptocurrency. Other countries too face issues aforementioned but instead of banning the currency altogether they regulate the crypto assets.