A senior Indian government official has informed Reuters that the nation of India is set to propose a law banning cryptocurrencies. The bill would be a major blow to the industry, as it would reportedly penalize anyone holding, trading or mining digital assets, including bitcoin.
Three years ago, the Reserve Bank of India (RBI) attempted to ban cryptocurrency by inhibiting banks from doing business with companies in the industry. Although India’s supreme court struck down the ban in 2020, it now appears that a new, even stricter ban will soon be proposed.
“The senior official told Reuters, however, that the plan is to ban private crypto-assets while promoting blockchain — a secure database technology that is the backbone for virtual currencies but also a system that experts say could revolutionise international transactions,” Reuters reported.
This coincides with recent speculation that India is considering releasing its own central bank digital currency (CBDC). This news suggests that the government understands the potential impact of digital currencies, but are yet to embrace privately-owned ones like bitcoin.
Despite this regulatory confusion, India remains a potential hotbed for Bitcoin adoption. With a population of 1.3 billion people and a widespread lack of access to traditional banking, Bitcoin could represent the unleashing of individual freedom and monetary access.
“In India, despite government threats of a ban, transaction volumes are swelling and 8 million investors now hold 100 billion rupees ($1.4 billion) in crypto-investments, according to industry estimates,” reports Reuters.
In addition, according to data from Coindance, India has maintained a consistent LocalBitcoins volume, at 113,772,416 rupee (about $1.5 million) for the week starting on March 3, 2021. The proposed ban, although foreboding, appears to be non-impactful on the transaction volume in India, at least for now.
It should also be noted that it’s not realistic for a government to “ban” a decentralized technology like Bitcoin, which is a free and open-source software that can be accessed and leveraged without approval from any third-party entity. However, they can impose penalties that make it difficult to access or easily use Bitcoin.
As Bitcoin adoption inevitably increases in India, so will the potential benefits to be reaped by network participants. These benefits may very well overtake any advantages sought through the proposed ban.