Indian Government Can Propose Illegalizing Holding of Unregulated Crypto Assets
It looks like India is about to tighten its grip on how cryptocurrencies are controlled in the country. Soon, it may be illegal to hold unregulated cryptos in India.
A recent report by Moneycontrol stated that India’s Economic Affairs Secretary committee headed by Subhash Chandra Garg may create a new law that would make it illegal to hold crypto assets which are not approved by the Indian government.
This is very worrisome, as India is the largest democracy in the world, so it can mean a severe blow to the crypto market if the legislation actually passes. The committee is, according to the reports, now in its final phase of deliberations on to whether pass the law or not. They will also decide what kind of punishment people will have for holding unregulated assets.
The committee was set up last year to create measures that could help to regulate the crypto market in India.
The Crypto Problem In India
To understand why the government of India has been creating such draconian laws against cryptos, you have to understand that there is a crypto problem in the country. While some crypto enthusiasts would affirm that this is a plan from the government to take the control out of people, the truth is, indeed, very different: India is swarming in crypto scams.
While countries like the United States have the U. S. Securities and Exchange Commission (SEC) and other financial regulators that help to curb scams, India has a considerably more vulnerable market, so part of this effort from the country’s government is to solve the problem of having so many Ponzi schemes and similar scams in the country.
Cryptos are also widely used for money laundering, so the government even has a financial incentive to be against them. However, it should be noted that the stance of the government, which can be sincerely trying to protect its citizens, is very harmful.
Early in April, the Reserve Bank of India (RBI) has prohibited all the financial institutions in the country to offer crypto business their services which basically was a heavy blow to the exchanges in the country because they could not deal with fiat currency anymore.
The crypto ban, as it has been called, has affected the market a lot and one can even say that by taking the legitimate exchanges out of the game, it may have helped scammers to proliferate. Because of this, the government should be very cautious about taking such aggressive measures.
One of the biggest exchanges in India, Zebpay, has shut down its door in September as it was unable to operate without banking services. The consequences of the ban have been very negative so far in the industry as India seems to be taking the opposite side as many countries decide to regulate cryptos instead of prohibiting them.
Unfortunately, this stance seems to be common in developing countries as Brazil has also recently had a case in which a bank shut down the accounts of an exchange in the country, Mercado do Bitcoin, and the law deemed that any bank could do the same, which can cause similar problems to the India crypto ban in Brazil.
Will we see these countries turning around and being more receptive to cryptos? Will their aggressive stance continue? Will scammers take over? We have to wait to know all that, so follow our blog for the latest developments.