News of Crypto Ban in India shook up the crypto market. The turmoil led to BTC falling by around 18% and ETH fell by 15%. At this juncture, nobody really is sure whether Crypto will be banned or not but there are certain rumours that it will be regulated.
This article explains why the government, despite all the backlash, might just ban all forms of Cryptocurrencies.
Is Cryptocurrency useful?
Well, the answer to that is Yes!
Does the government know this? Yes.
Will the government still ban it? Probably.
Cryptocurrency has found its fair share of love and hate. Elon Musk has mixed views on Crypto. Charlie Munger comments on Crypto saying, “The whole damn development is disgusting and contrary to the development of civilization.” The Winklevoss twins on the other hand call it “the trade of the century.”
It really is incredibly tough to take a stand on who is right and who is wrong at the moment. What is even tougher is to decide what to do now that the proposal has been drafted.
Bollywood Superstar Amitabh Bachchan has released his NFT recently. Even Hollywood’s legendary director Quentin Tarantino has decided to release clips of Pulp Fiction on NFT. (NFTs work on Cryptocurrency)
All of this sounds great at the moment so why does the government wish to ban it?
Why is the Government Banning Crypto?
Well the government isn’t stupid, at least the bureaucrats aren’t. Why are they in a mood to take a decision that (in India) can damage $10B! Why then can we have a ‘Crypto Ban in India’?
1. Cryptocurrency and Terrorism
Charlie Munger also said that, “I don’t welcome a currency that is so useful to Kidnappers and Extortionists and so forth” – just so the readers know, Munger isn’t stupid and stays shut on subject he doesn’t know about.
Thankfully, some crypto’s can be traced and a lot of them have been traced. It was found that cryptos were being used to fund terror activities. In September last year, 29 people were caught trying to raise funds and convert them to BTC in order to fund jihadi activites in Syria. This is just one instance, Al Qaeda, ISIS etc have been caught trying to receive funding using cryptos, mainly three – Dodge, BTC and ETH – because apparently they cannot be traced.
2. Cryptocurrency and Money Laundering
It was found that Indian currency was being converted to Tether and being transferred into Cayman Islands(tax haven) by Chinese nationals. These cases are found all over the world! Money is being laundered into the hands of cyber criminals(who arguably are the greatest threat after AI).
Recently US Seized $2.3M in BTC paid to Colonial Pipeline Hackers.
3. Cryptocurrency and Macroeconomics
The central bank has expressed serious concerns from a Macroeconomics and financial stability perspective. The reasons are fairly clear.
- If you let the crypto bubble rise, when it pops – there will be blood, a lot of it.
- Hypothetically if the surviving cryptocurrencies take over then INR will start to lose its value faster. People might start disregarding it completely.
- Finally, since cryptos are valued in dollars – there is the threat of “Dollarization” – as expressed by former RBI governor Dr. Raghuram Rajan.
While the author is skeptical of central banks, the bankers might have done their homework on this one. There can be serious consequences if Crypto has not been regulated and rest assured, the common public is not aware of half of the developments that take place.