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Teji Mandi Explains: Is a blanket ban on private cryptocurrencies possible?

04:53 PM Nov 25, 2021 | Teji Mandi

According to a Lok Sabha bulletin issued on Tuesday, the government plans to introduce the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, which will establish standards for cryptocurrencies and outlaw private cryptocurrencies. In July, the RBI announced that it was developing its own digital currency. Will there be a complete ban on cryptocurrencies? Should you panic? Read to know!

Cryptocurrency enthusiasts who have been concerned for days about a blanket ban on digital currencies in India may finally relax, as the central government plans to present a bill in the upcoming winter session of Parliament that, if passed, will decrease the popularity of other foreign cryptocurrencies.

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Although the central government is yet to define what exactly constitutes a 'private' cryptocurrency- Bitcoin, Ethereum, etc., will mostly not be banned because they are based on public blockchain networks, which means transactions made using these networks are traceable while still providing some anonymity.

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Is Blanket Ban Possible?

According to expert quotes shared on LiveMint, although the government can prohibit the use of local currency to purchase crypto, there is little that can be done to prohibit crypto wallets. Peer-to-peer networks are to monitor since people can easily transfer funds between one another via bank accounts and then transfer crypto via wallets.

Since crypto exchanges are where the majority of investors trade, blocking them is likely to drive away a portion of conventional cryptocurrency users who haven't yet dabbled in the technological era of crypto wallets and the like.

Should You Panic?

Short answer: No.

Cryptocurrency values plummeted a day after the central government announced that the cryptocurrency law would be introduced in the Lok Sabha's winter session. Investors were concerned about what would happen if the bill was enacted in its current form. According to industry estimates, India has 15 million to 20 million cryptocurrency investors, with total crypto assets of roughly Rs 40,000 crore ($5.3 billion).

The parliament's winter session begins in a few days, and we may likely see cryptocurrency regulation by the end of the year.

PS: El Salvador is the only country that has made cryptocurrency legal tender. China has banned cryptocurrencies to promote the government's digital currency.

What Should You Do?

The majority of experts advise against purchasing any cryptocurrencies at this time. That's because the session is only a week or two away from taking up the draught bill on cryptocurrency. Many analysts believe that an outright ban on cryptocurrency is improbable, regardless of what the government decides.

Investors should try to save their cryptocurrencies and not sell them in a frenzy. It's difficult to foresee what laws the government will enact and what it will allow.

What's Going To Happen Now?

If the government decides to outlaw cryptocurrency, all transactions between your bank and your cryptocurrency exchanges would be halted. You would neither be able to use your local currency to purchase any cryptocurrency nor be able to cash them.

Currently, there is no rule or prohibition in place in the country regarding the usage of cryptocurrencies. Notably, in recent times, there has been an increase in advertising, some of which have even featured celebrities, promising simple and big returns on cryptocurrency investments.

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