There’s an expression, “the cat is out of the bag” which means a plan is revealed before anything could be put into action – whether denial or confirmation. This could be the case for that much-sensationalized news about drafting a law punishing those engaging with cryptocurrencies.
In truth, some GOI personalities’ negative perception of cryptocurrency is nothing new. Finance minister Arun Jaitley, in his budget speech on 1 February 2018, stated that the government will do everything to discontinue the use of bitcoin and other virtual currencies in India for criminal uses.
In early 2018, India’s central bank, the Reserve Bank of India (RBI) announced a ban on the sale or purchase of cryptocurrency for entities regulated by RBI.
In 2019, a petition has been filed with the Supreme Court of India challenging the legality of cryptocurrencies and seeking a direction or order restraining their transaction.
The Economic Times reported that a committee in support of a total ban, including representatives of the Department of Economic Affairs (DEA), Central Board of Direct Taxes (CBDT), Central Board of Indirect Taxes and Customs (CBIC), among others was “of the view that already there is a lot of delay in taking action against cryptocurrency.”
The draft bill for banning the cryptocurrency has been in the works for some time with Economic Affairs Subhash Chandra Garg leading the pack according to some reports. (But is it the same bill draft that is now trending in media?)
Here’s the thing, the Reserve Bank of India is denying any knowledge of a proposed ban on cryptocurrencies — despite reports that a number of governmental agencies have backed the draft legislation — according to a Right to Information request filed on June 4.
Estimated 63 trillion dollars worth of debt
What motivated GOI into a blunder of banning the use of cryptocurrencies for ALL transactions, if indeed, GOI is contemplating it? If any country wants a brisker national economy, now is the time to encourage, not discourage crypto with punishment. Here’s a crucial point to dwell on:
“Countries, cities, states all manage credit for defence systems, healthcare, infrastructure, and education, loaning and borrowing money. Today, there is an estimated 63 trillion dollars worth of debt. The world runs on money. Those who control the money run the world.”
Blockchain-based systems depend on mass adoption and mass adoption is dependent on cryptocurrency, the fuel that makes the efficient machine run, and levels off the playing field for all stakeholders, without geographic limits.
While there were abuses, these are surpassed by greater benefits for global communities. India is a frontrunner among emerging economies in embracing the blockchain, according to Kavita Gupta, founding managing partner of ConsenSys Ventures, the venture capital arm of ConsenSys, a blockchain software firm.
Here are some accommodations that could be considered by GOI
The European Commission also notably presented a “parallel” proposal aimed at preventing tax evasion techniques as revealed in the Panama Papers. In 2017 it was revealed that the proposal will require cryptocurrency exchanges and cryptocurrency wallets to identify suspicious activity.
Not all countries see the advent of blockchain technology and cryptocurrencies as a threat, albeit for different reasons. Some of the jurisdiction surveyed for a Library of Congress report, while not recognizing cryptocurrencies as legal tender, see a potential in the technology behind it and are developing a cryptocurrency-friendly regulatory regime as a means to attract investment in technology companies that excel in this sector. In this class are countries like Spain, Belarus, the Cayman Islands, and Luxemburg.
Checks and balances in GOI
One of the many questions that arise from allowing investments in and the use of cryptocurrencies is the issue of taxation. In this regard, the challenge appears to be how to categorize cryptocurrencies and the specific activities involving them for purposes of taxation.
This matters primarily because whether gains made from mining or selling cryptocurrencies are categorized as income or capital gains invariably determine the applicable tax bracket. So, a total ban would mean loss from what could be perceived as a VERY profitable income if crypto trading and related activities are regulated effectively.
We also have this resource in a democracy: When one or more institutions are failing in their duty, the remaining shall normally take the lead in correcting the situation by using checks and balances as per the provisions available in the constitution.
We propose that sensational reporting does not arise simply from miscommunication in the face of good intentions. Rather, in some instances, both scientists and journalists may perceive benefits from sensationalism.
“If this law does come out, it’s going to make more news splash, making everyone aware of bitcoin and other cryptocurrencies. So the news, in fact, increases awareness and makes adoption even more possible,” comments Mr. KEY (Karnika E. Yashwant), a top influencer in the crypto and blockchain space.
After a sensationalized press release, journalists and scientists can point fingers of responsibility at each other, even though both may gain from the controversy or media attention that a sensationalized story receives. Let’s own up to our fears and discuss the possibility of a crypto ban with openmindedness.