A ban on Indian cryptocurrency will have serious implications for the future of the country’s economy and will lead to devaluation of the currency in a more severe form, said Raj Chowdry, blockchain entrepreneur and CEO of HashCash.
Choudhry, who is also CEO of US cryptocurrency exchange PayBito, said India’s move away from bitcoin (BTC) and other cryptocurrencies would be like leaving the US dollar. Choudhry believes that without regulation and the eventual adoption of cryptocurrencies as a reserve currency, the Indian economy will suffer in the long run.
Holding reserves in cryptocurrencies is just as important as holding reserves in dollars. By banning cryptocurrencies, India will be left with the lowest supply of its largest currency the world has ever seen. This will eventually lead to a devaluation of the currency in a more serious form, he said.
The fate of cryptocurrencies in India seemed ominous after an anonymous official leaked information about the impending ban to Bloomberg in February. Holders of cryptocurrencies should be given three to six months to transfer their money to their pension.
However, recent statements by the Indian Ministry of Finance suggest that the situation is not so clear-cut. Finance Minister Nirmala Sitharaman said reports of a total ban on cryptocurrencies were exaggerated and that discussions with regulators at the Reserve Bank of India were ongoing. Sitharaman added that the new rules will not be as strict as before.
Chowdry welcomes the regulation and taxation of cryptocurrencies if it means that businesses and related entrepreneurial activities can flourish in the country. The alternative would be to deny Indian startups that have already gained a foothold in the global market the opportunity to grow, Chaudhry said.
That India should embrace crypto with taxes and regulations that generate revenue and benefit a large number of Indian investors and startups that have gone global in a short span of time, instead of depriving people of their investment opportunities through a naive approach to crypto, he said.
As the Reserve Bank of India continues to push for the central bank to issue digital currency. As with all sovereign nations, India’s apparent determination to adopt a blockchain-based digital rupee suggests that its problems with cryptocurrencies lie not with the underlying technology, but only with who can control it.
Chowdry believes a weighted approach can be used to distinguish between blockchain as a technology and cryptocurrencies as an asset class.
These are two different and varied threads that can be picked up independently. If blockchain is a technology, cryptocurrencies are an asset class. It shouldn’t be a problem to apply them in the right areas, he said.
Despite fears from many that it could become a regulatory time bomb in India, global cryptocurrency exchange Coinbase recently announced that it is moving some of its IT services to India ahead of its upcoming IPO.
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