India Ban Cryptocurrency. Know The Reason Behind The Decision.
India is ready to bid adieu cryptocurrencies as per the latest updates. They are going to pass the long-awaited bill banning the use of cryptocurrencies altogether. In the last few months, the expectations of the Government acting soft on digital currencies were strong. But, now the buzz of the ban is quite strong. The ban would imply the private cryptocurrencies available focusing on the development of underlying technology and its benefits.
As soon as the decision of cryptocurrency bill was announced, the prices of the same took a big leap downwards. With the proposed bill, it becomes illegal to trade, buy, and sell cryptocurrencies. But, it allows the central banking institutions to get their own digital currency to follow the set regulations.
The Cryptocurrency and Regulation of Official Digital Currency Bill are going to be debated by the Indian Government in the winter session of the parliament. This news led to huge sales to trim the losses before the ban was implied. Once the bill is passed, Indian citizens will be prohibited from transacting in many cryptocurrencies.
Why Does The Government Of India Ban Cryptocurrency?
This was probably expected. India’s prime minister, Narendra Modi, stated that cryptocurrencies could “spoil our youth.” So, it was speculated that Government could go hard on the various digital currencies.
Now the legislation has been designed so that the Government of India can come up with its own digital currency with the backing of the Reserve Bank of India. The ban was recommended earlier in 2021 in January via the current bill’s draft. The primary purpose of the bill is to regulate crypto owners and give enough room to investors for wriggling the same.
There is a high probability that the Government of India is following China, where the cryptocurrencies got banned, and they are even planning to come up with their own. It made perfectly good sense as our RBI governor Shaktikanta Das specified that cryptocurrency seems like a huge threat to our “financial and macroeconomic stability.”
The banks are much more interested in the development of blockchain technologies that support different digital currencies to dominate the respective market that looks quite lucrative.
Recently, El Salvador announced the plans to develop a Bitcoin city and that too at the volcano base while getting it legalized as a tender. The same move is expected by more governments as and when India and China get started with their regulations.
How Is The Market Going To React?
As the bill is passed, the move can push the market down as trading and sales shut in the country. There are more than 15 million investors in the cryptocurrency domain holding around 400 billion rupees. This can certainly cause a slump with sales going by that big margin.
In fact, the news already has already caused a stir, with the digital currency sinking 25 percent to 60 rupees as per one of the crypto investors, Naimish Sanghvi.
According to the reports proved by Reuters, many crypto investors suffered big losses, because of the humongous selling in the market.
It didn’t end here. The huge selling of cryptocurrencies also had a dramatic effect on trading. The exchanges were finding it difficult to deal with the demand influx. There was a tweet from WazirX, one of the platforms to exchange cryptocurrency, “investing reports of the users facing delays on its application and web platform.”
Now the issue has been resolved, but it has cost some coins a significant amount of value. For instance, Bitcoin went down by more than 13 percent, while other coins like Dogecoin, Shiba Inu, and Memecoins experienced a plunge of more than 15 percent.
The Main Concerns
The RBI, the country's central bank, is viewed as holding conservative views on cryptocurrency and we are assuming that it might be one of the main reasons behind the ban on cryptocurrency in India, according to the CoinDesk website. In March 2020, India's Supreme Court reversed a two-year prohibition on digital currency trading enforced by the RBI.
Last week, RBI governor Shaktikanta Das stated that the central bank had "severe worries about macroeconomic and financial stability," and that blockchain technology can exist without cryptocurrencies.
On the other hand, some are saying India's plan to ban cryptocurrencies has not wrought the same damage on the bitcoin price as China's summer crackdown, but it has noticeably slowed down crypto's advancement of becoming an economic force in the real world.
Many are saying that government might not put a complete ban on cryptocurrency because there are a lot of things at stake like for the past year there are many apps that emerged with the sole purpose of exchanging crypto and putting a complete ban on the crypto may put millions of Indian investors money at risk, experts are saying the government will go with some tougher regulations rather the putting a complete ban on the crypto, but all we can do now is assume and wait for the winter session & and only then we might know where the cryptocurrency is going in India.
All In All
The impact of the Government of India banning cryptocurrencies might not be felt globally, as per Glen Goodman, author of The Crypto Trader. But the speculations are high, and it’s time we should wait and watch the run!