Famously, plans are being made in India by the Reserve Bank of India (RBI) to ban cryptocurrencies such as Bitcoin, Ethereum and XRP and others. Even though it is currently unclear what the governments move against cryptocurrencies will be, what we do know is that the fact that integrating this will be no easy task.
If anything, this attempt to ban digital currencies could only fuel money laundering, illegitimate transactions and tax evasion.
Of course, cryptocurrencies aren’t bound by a national jurisdiction but are powered by blockchain technology instead, a distributed and decentralised public online ledger which is used to record payments. A global network of computers manages the database that records all the deals.
There are around ten big crypto exchanges in India with an estimated user base of up to six million.
As reported by qz.com, cryptocurrencies don’t rely on dependent on a crypto exchanges wallet as they can be stored on a cloud storage platform such as Dropbox, a pen drive, laptop or a private virtual wallet. Nischal Shetty, founder and CEO of the Indian crypto exchange, WazirX said that “even if the government decides to ban possession, it will be just impossible to implement it.”
Another way the government could prevent the public from transferring cryptocurrencies could be by cracking down on the exchanges and forcing them to close up shop.
Shetty says that even that might not be successful saying:
“The government can successfully ban the known, big exchanges; but then small, hyperlocal exchanges will possibly come up and it will be extremely difficult to keep track of and block them.”
Even if the exchanges are closed down, a cryptocurrency investor would be able to migrate to any of the several stock exchanges across the globe. However, these are seen as foreign transactions and the Indian government has imposed checks and balances on such dealings.
Even so, there are ways that this can avoid. Crypto investors might resort to peer-to-peer channels to transfer their investments into the overseas exchanges:
The policy counsel at Incrypt (a company which gives advice to blockchain tech firms) Tanvi Ratna spoke on the matter saying:
“Once an Indian (citizen) is invested in a foreign exchange, it might become impossible for the government to trace his or her investments because most foreign exchanges also allow conversion to private coins which makes transactions untraceable.”
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