With India preparing to introduce the much-awaited Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, in the Winter Session of the Parliament beginning November 29, all eyes are on what will happen to the Indian investors hard-earned money once the ban on all private cryptocurrencies comes into effect.
With an estimated 15 to 20 million crypto investors, and no clarity on the size of the Indian crypto market, a blanket ban is set to shake up the entire crypto ecosystem.
A recent advertisement by the Blockchain and Crypto Assets Council (BACC), a part of the Internet and Mobile Association of India (IAMAI) with industry players like CoinSwitch Kuber, CoinDCX, WazirX and Zebpay on board, claimed that crores of Indians have invested over Rs 6 lakh crore in crypto assets to date — a figure which is highly questionable, as no one has any actual idea about the kind of money being routed via crypto exchanges.
After the news of an upcoming ban on all private cryptocurrencies in the Crypto Bill, 2021 broke out last week, several investors — who are majorly from small-town India and include women — started pulling out their hard-earned money from various crypto exchanges, which flooded them with lucrative ads promising wild profits in recent days.
According to experts, while a ban on private cryptocurrencies is a welcome step, the government must not only ensure that investors’ money is safe, but also trace millions of dollars that have been routed via crypto exchanges and platforms that the relevant authorities have no clue about.
A media report said on Saturday that over Rs 4,000 crore of illegal transactions via cryptocurrency exchanges have been unearthed by the Enforcement Directorate (ED) in the last one year.
“Crypto craze has reached Tier 2 and 3 towns and non-regulation of this market of Rs 6 lakh crore size is raising questions on the sovereign authority of the Government of India. Non-levy of GST in various layers of its transaction and non-imposition of income tax with penalty is already causing huge loss to the state and Central government’s revenues,” said New Delhi-based cyberlaw expert, Virag Gupta.
According to Jiten Jain, Director, Voyager Infosec, and a leading cybersecurity expert, “Crypto as a currency should be banned, as issuing a currency is the sovereign right of a central government. However, people can hold crypto as a commodity and the government should properly regulate and tax them.”
Grave concerns have now been raised over the misuse of digital coins on the Dark Web for terror acts and drugs trafficking by militant organisations, and for money laundering and hawala-based transactions — posing a serious threat to national security and a big challenge to the security agencies in India.
According to Subhash Chandra Garg, former Finance Secretary of India, the cryptocurrency exchanges that have recently mushroomed have deep business interests in mind, and making money is obviously the primary motive.
“These exchanges are operating outside the ambit of the law of the land and are desperate to get legitimised. After the total ban on private cryptocurrencies, if investors lose their hard-earned money, the government would be in a tough situation to answer them,” Garg had told IANS.
Amid the crypto debate in India, top Swedish financial and environment authorities have also called for an European Union-wide ban on cryptocurrency mining, claiming that consumer risks are significant as crypto assets are commonly used for criminal purposes, such as money laundering, terror financing and ransomware payments.
(Nishant Arora can be reached at email@example.com)