In a possible relief to investors, a sudden and complete ban by the government on cryptocurrencies is unlikely according to experts who point out that a brief transition phase would be needed.
“Disposing off cryptocurrency assets is not so easy. I don’t think it is practically possible to ban or dispose of existing cryptocurrency. A ban may have been possible a few years ago when things were getting started. In today’s situation, there would have to be regulations,” said Ajeet Khurana, Founder, Genezis Network.
Difficult to monitor
Further, the nature of cryptocurrency is such that it would be impossible to monitor if the ban is in place and there could continue to be peer-to-peer transactions.
Also see: Crypto should be allowed only as an asset: IAMAI
“A complete and sudden ban on cryptocurrency may not be possible because of the complex nature of crypto assets. The only way the government can monitor crypto-asset movement is through prevalent platforms. Once there is a ban, there will not be a system to monitor such transactions,” said Rashmi Deshpande, Partner, Khaitan & Co.
10 crore investors
The government expected to table The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 in the Winter Session of Parliament The bill is expected to call for a complete ban on crypto trading and investments and so, there has been a lot of panic selling by investors.
India holds over ₹6 lakh crore in crypto assets. The country is also home to about 15 home-grown cryptocurrency exchange platforms consisting of more than 10 crore investors, according to a note by Motilal Oswal.
Breathing room
While the huge amount of funds invested in crypto at present is not a defence, people would need some breathing room to offload it, Deshpande said, adding that many companies and countries do accept cryptos and a complete ban would impact the competitiveness of Indian business globally.
Also see: Crypto prices stable in India as investors await details of new Bill
Experts point out that even previous versions of the cryptocurrency bill floated by the government had given a 90-day transition period for cryptocurrency holders.
Large ecosystem
According to Mikkel Morch, Executive Director and Risk Management at ARK36 (a crypto and digital assets hedge fund), an outright ban on such investments might be difficult to implement.
“The digital asset ecosystem in India extends far beyond cryptocurrencies and includes other investable assets such as NFTs which are becoming increasingly popular in India,” Morch said.
Regulation required
However, experts agree that some amount of regulation is required.
Also see: Scammers stole “millions” in cryptocurrency in last month: Report
“It is also necessary to bring about regulations for platforms and for investor protection,” Deshpande said, adding that we must wait for the proposed Bill to be tabled before jumping to any conclusions.
