he proposed blanket ban on cryptocurrency in India is awaiting its formal review process by lawmakers. The draft Banning of Cryptocurrency and Regulation of Official Digital Currency Bill 2019 has proposed a 10-year prison sentence for anyone who “mines, generates, holds, sells, transfers, disposes of, issues or deals in cryptocurrency.
With such severity of punishment, many local cryptocurrency businesses are taking preemptive measures to protect themselves.
Rahul Jain — an employee at formerly domestic exchange Bitbns — told the Economic Times, “As a startup from India, we always wanted to serve from India, but this recent complication has made it difficult for domestic crypto exchanges to operate their business in India. So, we are now an Estonia-based company, and any Indian law to criminalize crypto will not impact us.”
This would make India the first democracy to outlaw cryptocurrency.
It was no earlier than April of 2018 that tech investor, Tim Draper, stated his criticisms of the Indian government’s stance on cryptocurrency. In that same month India’s central bank had announced they would cease dealing with any accounts related to cryptocurrency.
In Early 2018, it was reported that the Indian finance ministry stated, “There is a real and heightened risk of investment bubble of the type seen in Ponzi schemes which can result in sudden and prolonged crash exposing investors, especially retail consumers losing their hard-earned money. Consumers need to be alert and extremely cautious as to avoid getting trapped in such Ponzi schemes.”
The Indian finance ministry also said virtual coins don’t have any intrinsic value and are not backed by any kind of assets stating, “the price of Bitcoin and other virtual coins, therefore, is entirely a matter of mere speculation resulting in spurt and volatility in their prices.”
Sunny Ray, who works for Kraken's Global business Development and is Cofounder of Unocoin, posted a response chart to the tweet regarding CCN’s story on India’s claim of Bitcoin being a scheme, by comparing the nature of Bitcoin to Ponzi schemes and Pyramid schemes.
<blockquote class="twitter-tweet"><p lang="en" dir="ltr">Is bitcoin a pyramid or ponzi scheme? Short answer: no. Long answer: see below. <a href="https://twitter.com/hashtag/IndiaBitcoin?src=hash&ref_src=twsrc%5Etfw">#IndiaBitcoin</a><a href="https://t.co/58eQa2lI1f">pic.twitter.com/58eQa2lI1f</a></p>— Sunny Ray (@SunnyRayShow) <a href="https://twitter.com/SunnyRayShow/status/946711941250273280?ref_src=twsrc%5Etfw">December 29, 2017</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
Mark Cuban, the well-known U.S. Billionaire, used to be a critic of bitcoin, but today is now a holder of digital coins. He contrasts the opinion of the IFM and stated that the concept of intrinsic value does not exist.
Cuban said, “It is interesting because there are a lot of assets which their value is just based on supply and demand. Most stocks, there is no intrinsic value, because you have no true ownership rights and no voting rights. You just have the ability to buy and sell those stocks. Bitcoin is the same thing. Its value is based on supply demand. I have bought some though an ETN based on a Swedish exchange.”
Some feel that the proposed ban is coming from a place of lack of understanding of the ramifications of such a decision. Draper said in April 2018, “If the local authorities are banning crypto, then companies in the space should move elsewhere. The government need to realize that it is stifling innovation and should instead be creating an environment where their ideas can be tested and promoted. They have the choice to be trendsetters and attract the world’s best engineers and coders or lose their best and brightest to other regions.”
In August, Cointelegraph reported that Sidharth Sogani, the CEO of crypto and blockchain research firm Crebaco Global Inc, believed that India will lose around $13 billion worth of market if cryptocurrency is banned in the country. It has been predicted by some Indian investors that crypto is potentially a $10 trillion dollar business.
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