India Looking to Ban Crypto Payments

It's been a challenging year for cryptocurrencies and tier enthusiasts in India. The government has been advancing towards implementing restrictions on digital asset transactions and is moving ahead with a new agenda.

India Looking to Ban Crypto Payments

After attacking private cryptocurrencies on several fronts, India's parliament is now mulling rules to ban crypto payments across the country.

An Attack on Crypto Payments

This month, the Economic Times reported that India's parliament is gearing up to ban cryptocurrencies and their use for payments. Citing sources close to the issue, the report said the government plans to present a bill in parliament's winter session outlining its plans to work with the crypto industry on regulation.

As the Economic Times reported, the new bill won't place an outright ban on cryptocurrencies. Instead, it will change how they work in India. Instead of helping with transactions settlements, cryptocurrencies will be used as assets - like stocks, government bonds, and other alternative assets.

This approach differs from an earlier stance taken by India's government. Back in September, the Indian parliament published a bulletin outlining the 2021 Cryptocurrency and Regulation of Official Digital Currency Bill. In this bill, government officials sought to restrict all cryptocurrencies in India while creating the country's central bank digital currency (CBDC).

While the bill is a clear attack on private cryptocurrencies, it still allows for blockchain technology. Like many other countries, India does seem to recognize the importance of blockchain and how it helps advance the technological space.

No Opportunity to Grow

Now that the Indian government is switching its approach again, crypto enthusiasts can heave a little sigh of relief. But, it's not all great. With crypto transactions stifled, it is difficult to predict how Indians will benefit from a significant part of digital asset operations. They will only be able to hold and invest in cryptocurrencies like assets.

The government is also looking to clamp down on ads from crypto companies. A separate report from the Economic Times pointed out that some of India's largest crypto exchanges - including Bitbns and WazirX - have already paused their ads.

Nischal Shetty, WazirX'ss chief executive, told the news source that they hit pause on their ads because they don't want to lure anyone who doesn't understand cryptocurrencies. The company also put a temporary hold on sponsorship deals and campaigns as they uncover the new rules guiding promotions.

It is difficult to see how exchanges and crypto businesses can expect to grow without ads. Crypto companies in Europe and North America are working on grand expansion plans - ads, campaigns, and sponsorships playing a major part.

If Indian exchanges are unable to run ads in their country, they will be unable to educate people on the benefits of cryptocurrencies, significantly hampering growth prospects.

Coin Prices Drop as India's Crypto Bill Comes to Light

Things hit a tipping point this week as India's parliament announced its crypto bill. The Cryptocurrency and Regulation of Official Digital Currency Bill debuted Tuesday at the Lok Sabha - India's lower house of parliament. It is one of 26 new bills that parliament will debate when the winter session kicks off on Monday.

The crypto bill has a simple mandate: create a legislative framework for India's official cryptocurrency while banning all private cryptocurrencies except assets that "promote the underlying technology of cryptocurrency and its uses."

If the bill passes, India's government officials will need to decide how to treat the digital rupee and various assets.

Since the bill's announcement, cryptocurrency prices in India have tumbled. Data from WazirX shows that on Wednesday morning, the price of Bitcoin fell from about $61,820 to about $52,650 - a drop of almost 15 percent in just two hours. Other coins like Ether and ADA saw over 10 percent drops in their local prices.

India needs a nuanced approach to cryptocurrency regulations. The country remains one of the world's biggest markets, with 1.4 billion people - many of whom will need the advantages of cryptocurrencies. If the government decides to keep private cryptocurrencies out of the economy, it will be to the detriment of its citizens and the companies that serve them.

China has already moved forward with its hardline approach towards cryptocurrency regulations. A similar move from India will certainly impact the industry moving forward.


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