What Can You Do If Government Bans Cryptocurrency?
While China in early 2017 has already blocked the Cryptocurrency exchanges, the U.S banks are denying the Cryptocurrency purchases to avoid the illegal transactions
Photo Credit : getwalnut.com
Budget 2018 has raised concern over the viability of Bitcoins and other Cryptocurrency:
A lot of controversy has cropped up in the last few months regarding Cryptocurrencies across the globe. While China in early 2017 has already blocked the Cryptocurrency exchanges, the U.S banks are denying the Cryptocurrency purchases to avoid the illegal transactions.
Meanwhile, In India, our honorable Finance Minister Arun Jaitley, during his national finance budget on Feb 1st, 2018 clearly stated that,
“Indian Government does not consider Cryptocurrencies like Bitcoins a legal tender and will take all possible measures to curb their use for illegal activities”
This statement and various other news around the globe has made the Bitcoins to fell down in price to a two-month low of less than $7,000.
If RBI decides to ban Bitcoins, what happens?
In past 6-9 months India has seen infusion of investment by large number of Bitcoin investors.In fact, one in every 10 Bitcoin transactions takes place in India. Currently, there has been no adverse step taken by Government of India in regard to banning or declaring cryptocurrencies as illegal in India however, in the event if government declares cryptocurrencies as illegal then it may impact Indian investors/exchanges/start-ups in the following manner-:
- Price of cryptocurrencies would fall drastically as India accounts for a substantial buying/selling of overall trade volumes around globe
- Exchanges like Zebpay, buyUcoin, coinsecure, koinex, etherbit etc. will face great difficulty as trading of cryptocurrencies shall immediately cease leading to confusion amongst the user and exchanges themselves as to credit and debit of transactions which have been completed but not reflected/given effect to in real time.
- Investors or one-time users who are holding cryptocurrencies be it bitcoin, Ethereum, ripple etc. will face problem in selling these cryptocurrencies as the only medium i.e. Exchanges will cease transactions. The only mode which will be left amidst shall be to sell them at a haircut in cash in black market, which in turn may create problem for them in future.
- Lastly, panicking users may try to sell it off shore in foreign exchanges which would also not be easy and will attract exposure of FEMA
It is hoped that government do not take any irrational step in regulating or ceasing activities related to cryptocurrencies and regulations should be framed in a positive and rational manner as any regulation banning cryptocurrencies in India without a rational reasoning or data will poise India as a country which is not able to adapt towards the emerging changes in technology industry.
It has recently been stated by hon’ble minister Subhash Chandra Garg, Secretary, Department of Economic Affairsat a CNBC TV18-Mint event that government will be coming up with proper framed regulations around cryptocurrencies and blockchain by end of this year, therefore it can be construed that no immediate action, which may impact the cryptocurrencies trading in India, will be taken. On other hand, various banks like Citi and ICICI has stopped use of their cards for buying cryptocurrencies at exchanges however, this step has been taken by the banks as a precautionary step or on instructions of RBI is still unknown.
Rest all the exchanges, users and investors needs to be equipped with proper knowledge, understanding of law and equipped team to handle situation where government ban cryptocurrencies in India. One of the pre-emptive measures which exchanges can takeare to form a company outside India so that in case Indian government bans the same there is no meltdown.The exchanges should also guide their investors properly so that nobody will lose their money.
Disclaimer: This is just a view as an expert, it should not be considered as legal advice.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.