India’s Central Bank, through the deputy governor, Rabi Sankar has advised a ban on crypto trading in the country, as captured in a report published on their website on Monday.
In the report, a few reasons were considered as to why many proponents advocate that banning digital currencies will be a bad approach. Some of these reasons include the promising nature of Blockchain as an emerging technology for Indians; the consideration on the part of other countries to regulate and not outrightly ban these volatile asset classes.
Additionally, the sheer impossibility of banning crypto because a flock of Indians have invested in them, which makes banning these assets an avenue to make them lose the wealth they have amassed, and the argument that cryptocurrencies can be traded anonymously, so issuing a ban is not likely to be effective as to curtailing its excesses.
With the above factors mentioned, crypto shouldn’t still stand any chance as to its patronage by the Indian government, Rabi Sankar advised saying;
“cryptocurrencies are not currencies, or financial assets or real assets or even digital assets. Therefore, it cannot be regulated by any financial sector regulator.”
Sankar further mentioned in the speech that while it is true that advanced economies are adopting digital currencies as a substitute for handling physical cash, India’s economy is not directly benefiting from the trade.
He noted that
“Almost all cryptocurrencies are priced in terms of Dollars (or potentially any of the freely convertible currencies). Wider adoption would actually result in wider use of these currencies. So, cryptocurrencies are not a threat to convertible currencies as they are to the Rupee, which is not an international currency.”
As to Indians who stands the risk of losing their wealth should any ban be implemented, Sankar said investing in crypto comes with lots of risks, which is not oblivious to Indian investors. He pointed out that the “Reserve Bank has been warning investors of the risks for nearly a decade,” hence “Investors who have acquired these instruments have done so with their eyes wide open, at their own risk and do not warrant any regulatory dispensation.”
In his defense solidifying reasons for the considered ban option, the RBI Chief noted that “cryptocurrencies have specifically been developed to bypass the regulated financial system,” a feature that “should be reason enough to treat them with caution.”
Considering his broad exposition, Sankar drew the conclusion that banning Bitcoin and other digital currencies “is perhaps the most advisable choice open to India.” While this opinion remains that of Sankar, it might well reshape the disposition of the Indian government which has been considering levying taxes on crypto gains as a way to regulate crypto in recent times.