Indian crypto ban can cost billions in losses to the country. Here’s how…
The RBI, which is the central bank of India, has ‘effectively’ banned crypto transactions within the country. This has caused the Indian crypto community to rebel against the Supreme Court of India. Furthermore, what’s worse is that this could lead to losses of billions to the government!
About a year ago, most Indians would’ve never paid heed to words such as Blockchain, Cryptocurrency and Bitcoin. But today, they have become the hot topic of discussion for most youngsters, growth hackers and businessmen. Such is the impact it has had on the Indian financial market.
What’s astonishing is that the number of Indians involved in crypto trade is well over 9 million, which is a huge number compared to most ‘ non-crypto-friendly’ countries. Despite the interest shown by the people, the government seems to somewhat hate the concept of cryptocurrencies. Apparently, they hate it so much that they ‘effectively’ banned their trade.
So what’s the ban all about? This is what the RBI says in its official statement:
“In view of the associated risks, it has been decided that, with immediate effect, entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling VCs (virtual currencies).”
There are a few things that one must understand here.
- The RBI only stops financial entities associated with it to stop providing services to crypto traders.
- It hasn’t said that cryptocurrency trading is illegal in India.
- It hasn’t asked cryptocurrency exchanges to shut down.
- Most important of all, it hasn’t asked the people to stop trading in crypto.
This leads to a conclusion that Indians can trade in crypto, but not with the help of banks within the country. So they can either send and receive crypto coins amongst themselves, or get the money transferred to a bank in a different country and then buy crypto using it.
Trading from one individual to another could involve a lot of complications, like a difference of value, bargaining and possible cheating. Hence, the only other way for people to still buy and sell crypto tokens would be to take the help of banks in foreign countries. This means only one thing; Money would only be flowing out of the country, which ultimately leads to a loss of revenue to the government.
Though the Bitcoin trading volume in India initially plummeted after the ban was announced, it has bounced back in the month of May. People are making the most of it before the ban is set to take effect in June. Akash Aggarwal, CEO of Alluma, says,
“I totally agree with the concerns of the RBI, but their approach is somewhat different from what it should be, based on the actions of other regulators around the world. As per the RBI’s policy, a citizen of India is allowed to remit $250,000, which is ₹1.5 crore, and we are talking about nine million users in India. If people start sending money out of India just to trade cryptocurrencies, is the RBI or the government of India ready to lose those billions out of India?”
Many petitions have been filed against RBI’s decision, only to be waved away by the Supreme Court of India. Some have even launched online petitions, which have received great response from the community. It’s high time the Indian government considers this as a serious issue before a lot of money moves out of the country. If not, the Indian government’s effort in saving its fiat currency’s value could turn out to be its own destroyer!
Image via Shutterstock
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