India’s National Association of Software and Services Companies (NASSCOM) says a bitcoin and crypto ban in the country would be counterproductive.
The Association’s comments come as a government committee recently recommended a blanket ban on virtual currencies in the country, along with financial fines and penalties.
Several stakeholders in India continue to rail against any plan by the government to outlaw bitcoin and cryptos, in general, saying such measures will harm the country’s relevance in the emerging global digital economy.
Bitcoin Ban Serves No Constructive Purpose
According to The Economic Times, Nasscom believes that a bitcoin ban in India is hardly the solution. The IT trade organization instead prefers that the government seek a more nuanced approach to regulating cryptocurrencies in the country.
Commenting on the matter, Nasscom issued a statement, saying:
“Nasscom believes that the recent proposal of the inter-ministerial committee of the government to ban all cryptocurrencies barring those that are backed by the government, is not the most constructive measure. Instead, the government should work towards developing a risk-based framework to regulate and monitor cryptocurrencies and tokens.”
Nasscom’s comments echo many of the sentiments espoused by commentators dismayed at the current state of affairs concerning bitcoin and cryptos in India. Earlier in July, the inter-ministerial committee set up by the government to look into crypto regulations in India submitted its report recommending a total bitcoin and crypto ban.
The committee also advised the government to pass laws that proscribe fines and penalties for people caught engaging in crypto transactions. The emergence of the report confirmed earlier rumors of a plan to clamp down on cryptos in India by imprisoning persons found to be dealing in virtual currencies.
India Will Only Get Left Behind
For Nasscom, a bitcoin and crypto ban would leave India trailing behind the rest of the world in the growing digital space. The trade organization believes that India’s economy will be significantly handicapped by digital innovators electing to move to friendlier climes.
Nasscom also picked holes in the argument put forward by crypto critics in government about virtual currencies being used for illegal purposes. The IT body countered that a bitcoin ban would leave only non-compliant entities operating in the country’s digital underground. Thus, a blanket prohibition serves to achieve the opposite effect of stifling the industry.
Nasscom addressed a better course of action for the government in its statement saying:
“We should work towards creating a regulatory framework that will constantly monitor and prevent illegal activities. Regulating would allow the law enforcement agencies to be better equipped to understand these new technologies, enable them to gather intelligence on criminal developments and take enforcement actions.”
Government Needs to Rein in RBI and the Banking Cartel
So far, authorities haven’t shown a willingness to adopt a nuanced approach to crypto regulations. Back in 2018, the Reserve Bank of India (RBI) issued a ban on commercial banks facilitating crypto transactions.
The RBI ban has seen numerous bitcoin exchanges leave the country with some moving to Malta and Australia. Recent reports have even emerged showing the apex bank to be the driving force behind the push for a blanker bitcoin and crypto ban.
When the RBI released its fintech regulatory sandbox earlier in 2019, cryptos were conspicuously absent from the list. Instead, the central bank made provision for blockchain-based businesses.
The RBI hasn’t been alone in the attempts by the banking class to stifle cryptocurrency use in India. Commercial banks have terminated accounts of customers found to be dealing in virtual currencies.