India’s back and forth with Cryptocurrencies seems to be coming to a halt as the government is headed towards taking a stand on digital currencies.
The Reverse Bank of India (RBI) has set out to place a permanent ban on digital currencies. According to the Economic Times, a senior government official confirmed that inter-ministerial consultations are currently ongoing, and a note sent by India’s finance minister centers the discussion on the said ban. The Cryptocurrency scene in India is currently going through troubled waters as the new ban is expected to effectively contain Cryptocurrencies, as opposed to the previous circular ban.
The ban shows itself to be a stronger substitute as a legal framework than the former circular ban. After the consultation phase in the cabinet, the note will later be moved to the parliament. According to a Bitcoin expert, the proposed law is certain to take effect against Cryptocurrency related ventures if it shares similarities with previous laws.
The Circular Ban and its effects on Indian exchanges
Back in March, the Reverse Bank of India had ruled against the ban on digital currencies. The circular ban dated on the 6th of April was squashed after a supreme court hearing in January. The case in favor of digital currencies was brought to court by the Internet and Mobile Association of India (IAMAI) along with representatives of some leading Indian digital currency exchanges. The ban which was incepted in April 2018 requested financial firms in India to withdraw from providing services to every Cryptocurrency business in the country. By July 2018, the ban had already taken effect and leading Indian Cryptocurrency exchanges like CoinDelta, Zebpay, and Koinex had shut down all business activities.
However, the court hearing that termed the bill unconstitutional had led to the reopening of peer to peer Cryptocurrency services. Infact, a handful of Cryptocurrency related businesses had begun to thrive and new firms had even started to move into the space. For example, Binance had begun to strengthen partnerships with Indian exchange Wazirx, to launch the first initial exchange offering (IEO).
Due to the ban, Zebpay which was the leading Bitcoin exchange in the country had shut down operations In September 2018. But in March, the exchange made a comeback with a relaunch, supporting five Crypto-to-Crypto trading pairs with a no trading fee offering for an entire month.
Cryptocurrency exchanges in India will be highly affected by these laws if implemented, mainly because exchanges are only just beginning to bounce back on their feet. If leading exchanges like Zebpay shut down again, this could force smaller digital currency agencies and firms to pack up as well. Moreover, investors will also secure inevitable losses which will certainly affect adoption.