You’ve Heard Of India’s Crypto Ban, But Why Did They Do It In The First Place?
The Reserve Bank of India (RBI) have relished in headline news for the past couple of weeks. This of course stems from a ban on cryptocurrencies, stipulated by the RBI a few months earlier. The ban came in to force at the start of July and now, as it stands, means that traders in India can no longer trade FIAT-Crypto or vice versa. Technically, the RBI do wish to ban all crypto interaction, however as it stands, it is still possible to trade crypto-crypto via some exchanges. The RBI are also now going to refuse service to customers who are seen to be engaging in crypto activities.
In order to help reverse this decision (plenty of people are already working on the case), we need to understand why they established the ban in the first place. Once we work this out, we can begin to debunk rumours and prove that actually, the RBI have made the wrong move in this.
So, what is it the RBI are worried about?
According to Quartz (India), there are a few key factors that concern the RBI. Firstly, they worry that cryptocurrencies put investors and banks at risk of fraud. According to Quartz, a member of the Internet and Mobile Association of India has said
âIt has said that it wants to ring-fence gullible investors and lenders from scams, several of which have happened internationally.â
Next up, the RBI seem to worry about the anonymity and privacy that shrouds cryptocurrencies. Of course, they seem to forget how anonymity is still possible within FIAT currency, regardless of this though, crypto is public enemy number one because it gives uses ultimate privacy, something that the RBI donât like. According to Quartz:
âAnother reason cited by the RBI is the anonymity of the transactions and, therefore, the difficulty in tracking the source of money. The firms have refuted this, too, claiming strict adherence to know-your-customer norms to prevent money-laundering.â
Finally, the last (and quite key) worry for the RBI is that they believe cryptocurrency has no intrinsic value, itâs essentially worthless because it isnât backed by a viable asset. We however know that cryptocurrency is in itself an asset, so requires no such backing.
You can see the full report by Quartz for yourself, here.
These reasons are similar to the factors that seem to worry governments and authorities worldwide. Until we can remove the stigma that plagues cryptocurrencies the RBI and other similar authorities wonât reverse their decisions. Not only because they feel strongly about the issue but also, going back on such a big decision may be seen as a public embarrassment. EIther way though, it is handy to see what the RBI are worried about. Hopefully the teams that are working to change the rules in India know this and have an accurate plan of attack, otherwise, India may disappear off the crypto-coaster for good.