MUMBAI: The Centres proposal to implement a blanket ban on the sale, purchase and issuance of cryptocurrency may not only prove futile but also be counterproductive, claim experts of the domain.Last week, ET had reported that a draft bill proposing the ban is being discussed among various government bodies.Further, at a recent meeting of representatives from the Department of Economic Affairs (DEA), Central Board of Direct Taxes (CBDT), Central Board of Indirect Taxes and Customs (CBIC) and the Investor Education and Protection Fund Authority (IEPFA), an immediate blanket ban was proposed under the Prevention of Money Laundering Act 2002 (PMLA) as the draft billbecoming a law may take some time.To protect the investorsDepartment of Revenue may immediately issue a notification under PMLA to completely ban the sale, purchase and issuance of all forms and types of cryptocurrency.
All exchanges dealing with crypto should be immediately shut down, according to the minutes of the meeting reviewed by ET.However, experts believe the decentralised nature of cryptocurrency may render such a ban futile.
None of the advanced economies in the world barring China have banned crypto, as these countries have understood that banning the exchanges may result in proliferation of these currencies through illegitimate sources such as dark web and underground marketplaces, said the founder of an Indian exchange.
How can the government ban something it has no control over in the first placeWhile crypto-assets are banned in some countries such as China, Russia, Ecuador and Bolivia, most major nations such as the US, Japan, European Union and Australia have taken a pro-stand, letting their citizens transact through regulated exchanges.The core idea is that these coins are completely decentralised and currently no government has the technology to monitor them unless the purchases are made through regulated exchanges, said Nischal Shetty, CEO of Mumbai-based crypto-exchange, WazirX.
All exchanges in India are mandated to follow due processes such as KYC compliances and maintain a log of transactions.The Reserve Bank of India had placed a ban on all regulated financial entities from dealing in virtual currencies in June 2018 citing concerns of consumer protection, market integrity and money laundering, leading to widespread exodus of Indian investors from these channels.However, nearly $1 million worth of crypto-currencies such as Bitcoin, Etherium and Ripple are bought and sold daily from Indian exchanges, industry players claim, with the overall industry believed to be worth $1.5 billion and having about 5 million investors.
Further, more than half of these investors are believed to be in the age group of 18 to 25.Binance, which is the largest crypto-currency exchange in the world, sees nearly 7.3 per cent of its traffic from Indian addresses; the sixth highest in the world, said Sidhath Sogani, chief executive officer of CREBACO, a cryptocurrency analysis company based out of Singapore.