Speculations are growing that the government may consider blocking internet protocol (IP) addresses of crypto-facing businesses and firms operating in the country.
This step was originally taken against adult sites and Chinese apps like TikTok. Cryptocurrency exchanges are about to receive the same treatment as the government cracks down on crypto use.
The Indian government is reportedly preparing to present a Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 in the coming days. The bill is widely supported by the Reserve Bank of India (RBI). If it passes, we could see a blanket ban on private ownership of cryptocurrencies in the country.
The Indian populace has criticized this move, with crypto exchanges and key actors in the crypto space labeling the move inappropriate and bigoted. Concerted efforts have been made with some crypto actors launching an online campaign tagged #IndiaWantsBitcoin to influence the government’s decision.
A senior government official informed Reuters that an outright ban on cryptocurrencies was likely as the government is bent on stamping out the volatile asset class.
The official noted that the government would give crypto investors 3 to 6 months to liquidate their crypto holdings, and deterrents would be fined and not imprisoned.
The Indian government has previously said it is modeling its crypto laws according to neighboring Asian nation China. The government’s position on crypto has remained clear and is captured in the RBI’s statement that cryptocurrencies like Bitcoin were a danger to an already fragile economy.
IP Ban May Not Work Due To Workarounds
But despite reports growing by the day of a blockage of crypto exchanges’ IP addresses, industry experts say this could be hard to enforce.
The government’s ban on Chinese apps like TikTok has enjoyed minimal successes due to the prevalence of virtual private networks (VPNs).
The anonymous protocol, which provides services otherwise inaccessible based on a user’s location, could provide a backdoor through which crypto investors can continue trading in the country. Other routes have been earmarked as loopholes:
“…peer-to-peer (P2P) trading, using cash to buy or sell virtual currencies and using external wallets to store and transfer crypto-assets, using part of the money permitted to send abroad for investment within the liberalized remittance scheme limit of $250,000 can be diverted for buying cryptocurrencies- remain loopholes,” the source stated.
But still, the country is divided in its crypto law. Some government officials like Minister of Finance and Corporate Affairs Nirmala Sitharaman had said the government would take a dynamic approach in regulating the nascent industry. Others have called for an outright ban, the most outcry coming from the RBI camp- an independent but integral part of the Indian financial system.
Crypto analysts say if the government proceeds with the ban, the country could see about 7 million crypto investors lose out on the burgeoning industry.