India on the verge of total cryptocurrency ban

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India on the verge of total cryptocurrency ban
India on the verge of total cryptocurrency ban

According to CNBC-TV18, a research group set up by the government of India has concluded that all virtual currencies in the country should be outlawed. The task assigned to the employees of the group by the authorities was to create a bill regulating the circulation of cryptocurrencies.

The group, headed by Subhash Chandra Garg, Secretary of the Department of Economics under the Ministry of Finance of India, was established in November of this year. After completing its mission, the group handed the conclusion to Finance Minister Arun Jaitley, who must make a final decision.

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Members of the group believe that the Reserve Bank of India needs a new law to implement the ban on cryptocurrencies: “The law should prescribe punitive measures that governments and law enforcement officers will apply to persons or structures that sell cryptocurrencies and/or own them.”

If the authorities agree with the conclusion of the group members, a crushing blow will be dealt to the cryptocurrency sector in India. Theoretically, this may also affect the global cryptocurrency market.

It is noteworthy that, advocating a total ban on cryptocurrency, the research group suggested that the government “in the future” consider the possibility of creating a sovereign national digital currency.

Although we do not have comprehensive data on the number of cryptocurrency users in India, according to some estimates, the number of active traders reaches (or has reached this year) five to six million. According to Reuters, which conducted a survey in January of this year, for a period of 17 months, Indian citizens conducted trades and other cryptocurrency transactions in the amount of $ 3.5 billion.

However, it should be taken into account that this is data at the beginning of the year, while in April the Reserve Bank of India instructed financial institutions to cut off all ties with cryptocurrency exchanges and investors (five million traders, according to Ajit Khurana, heads of The blockchain committee and cryptocurrency at the Internet and Mobile Association, were engaged in trading through regulated banking channels). The ban, despite attempts by the public to challenge it in the Supreme Court, entered into force in July.

As a result of this step, in September, one of the country’s largest cryptocurrency exchanges, Zebpay, was forced to stop working. Restrictive measures by the Central Bank led to the fact that Zebpay users could no longer introduce funds to the platform in the Indian national currency, as well as carry out their withdrawal. In October, representatives of the exchange reported that they were transferring operations to Malta. Zebpay serviced up to half of all bitcoin transactions in India. The users of the platform were more than 5 million people, and the Zebpay mobile application made it possible to conduct operations with 20 digital currencies.