India has declared a long-term plan to cut every cryptocurrency traded domestically. This comes in light of reduced public acceptance, with people expecting digital currency popularity to decrease over time.
The ban will affect all private cryptocurrencies. It will only allow for the existence of blockchain technology, and for reasons that stray far from crypto use.
However, the announcement has triggered brutal consequences. This week, cryptocurrency prices have dropped dramatically on Indian exchanges.
Harsh Legislature Through a Crypto Bill
A government bulletin indicates that the ban is a part of an upcoming online currency bill for winter this year. The ban follows official Indian digital bill regulations.
The legislation plans to “create an easy framework in preparation of the upcoming official online currency. This currency will be created by the Reserve Bank of India”.
Thus, the plan to ban most digital currencies is not new. In fact, this plan may be the same as that presented in India’s January announcement.
As the announcements show, the Indian government isn’t tolerant towards digital currencies outside of its national bank’s control. This may stem from a view where India treats cryptocoins less as assets, and more as a payment method.
Regardless, the bill is yet to be exposed to the public. The specifics of the bill are yet to be revealed.
A noticeable value drop in several currencies occurred after the announcement of the bill.
Bitcoin has dropped more than 13% of its value as shown on the Indian site WazirX. Other currencies include Dogecoin and Shiba, which dropped more than 15%.
However, Glen Goodman, author of the Crypto Trader mentioned that, “this impact is actually small on the global scale”.
Goodman also said, “Even though China chose to ban the cryptocurrency, and it was a big deal then, it did not kill the market”.
According to local Indian news agency “India Today”, it is likely for currencies to exist under the proposed bill. However, the market may have to trade it through exchanges that meet regulatory requirements.
The report also mentioned that there will be restrictions on who should be allowed to establish cryptocurrency, all justified as protective measures for investors.
CoinDesk website mentions that the RBI has a conservative outlook on cryptocurrencies.
Regardless, March 2020 saw India’s Supreme Court shut down the ban that the RBI proposed for 2 years.
Late November, Shaktikanta Das “the RBI governor” outlined that the national bank has major concerns regarding the global economy. Das also said, blockchain technology can improve without the currency.
Goodman pointed to the last ban in China and Salvador towards plans to establish Bitcoin cities on a volcano base, where cryptocurrencies would be the core funding source for the project, adding that officials see crypto differently, this differing from one government to another.
Goodman also hinted that China’s ban may be a selfish control attempt – aiming to ban all that the Chinese government doesn’t create.
Will India follow a similar plan to that of China? Only the details of its policies will tell, which should be clear within the next few months.