Future of Bitcoin: Should the RBI Ban Cryptocurrencies?
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While Bitcoin's popularity is at an all-time high around the world and India, regulations in India still haven't wavered in favour of them. Bitcoin is the world’s first decentralized cryptocurrency or virtual asset which was launched in 2009 and the transaction are based on blockchain technology.
On one side, Bitcoin is gaining popularity among investors, including in India and touching its all-time high at $7,500 level, the Government of India and Reserve Bank of India continue to remain cautious of the non-fiat cryptocurrency. A few months ago, Sudarshan Sen, Executive Director, RBI said the regulator is not comfortable with non-fiat cryptocurrency like the bitcoin and is looking at fiat cryptocurrency. Additionally, earlier this month, rumors started doing the rounds that the regulator might ban cryptocurrency altogether.
The government’s present status is very unclear and the India bitcoin industry is in constant dilemma about the future of their product and the technology. While industry players agree that the government has legitimate concerns over user protection and scams, they are not happy with the knee-jerk reaction to the use of the technology.
When Sandeep Goenka started Zebpay with Saurabh Agrawal and Mahin Gupta, their well-wishers thought it was a risky business and advised them to exit the Bitcoin exchange. But the trio was confident about the technology and its potential. So, ignoring all the words of cautions, they decided to work hard to play a bigger role in the cryptocurrency revolution in India.
“For a potential scam that could affect a small percentage of the user base, you cannot rule out the entire technology as unsafe.There are so scams on the internet, so will you shut it down,” said Goenka.
Not an easy job to ban
Since Bitcoin is decentralized digital currency, which can be transferred to anyone and anywhere in the world, it very difficult to ban such virtual currency.
Additionally, Indians have been investing in bitcoins way before these domestic wallet companies cropped up. According to sources, the number of bitcoin holders has grown from a few thousand to about 1.5 million users between 2012-2017. Presently, the Indian bitcoin monthly trade’s turnover is about Rs 2000 crore.
So even, if the regulator manages to ban the virtual currency, Ajinkya Lokhande, Founder of BitBox says the people will hold bitcoins through other channels.
“We don’t know what the government plans to do with cryptocurrencies. However, if any extreme step is taken, users will have control on their bitcoins and they can transfer it to their other blockchain wallets,” he added.
Meanwhile, players suggest the RBI should regulate cryptocurrencies instead of the blanket ban. “RBI should target the scammers under the existing laws related to scams or fraud,” says Goenka.
Take an example of peer-to-peer lending platforms. The RBI was first apprehensive of P2P platforms, but with its growing popularity among the users and risk involved, the watchdog had to bring it under its umbrella giving it the NBFC status with industry specifics guidelines.
The cryptocurrency industry is expecting a similar approach from the RBI and is trying to educate the government and the regulator about blockchain – the technology behind digital currency.
At present, the government looks very open to the blockchain technology, Goenka says adding that but these things will take time as the institution is not made up of one person and everybody has to be onboard.