According to blockchain founder and head of HashCash, Raj Choudhury, the ban on cryptocurrency in India will have dire consequences for the future of the country’s economy and lead to devaluation “in the worst possible way.”
Chowdhury, CEO of US cryptocurrency exchange PayBito, said that India’s abandonment of Bitcoin (BTC) and other cryptocurrencies would be tantamount to giving up the US dollar. Chowdhury believes that without regulating and adopting the cryptocurrency as a reserve currency, the Indian economy will suffer in the long run.
“Maintaining cryptocurrency reserves is just as important as preserving dollar reserves. By banning the cryptocurrency, India will have the lowest reserves of the most important currency the world has ever seen. This will ultimately lead to the devaluation of the currency in its worst form,” he said.
The fate of cryptocurrencies in India looked horrific after an anonymous official leaked information about an impending Bloomberg ban in February. Cryptocurrency holders are expected to have a window of three to six months to transfer funds back into fiat.
However, recent reports from India’s Ministry of Finance have shown that the situation is unclear. Finance Minister Nirmala Sitharaman said that reports of a complete ban on cryptocurrencies have been overstated and discussions are underway with regulators at the Reserve Bank of India. Sitraman added that any future regulations will not be as stringent as previously described.
Chowdhry welcomes regulations and taxes for cryptocurrencies if that means business and industry can thrive in the country. The alternative, Choudhury said, is to deny growth opportunities to Indian startups that have already established a global foothold.
“India needs to adopt a cryptocurrency with taxation and regulation that would generate income and benefit a large number of Indian investors and emerging companies that have become global in a short period of time, instead of depriving people who choose … the cryptocurrency approach.”
Meanwhile, the Bank of India continues to oppose issuing the digital currency to the central bank. As with all sovereign nations, India’s apparent desire to launch a blockchain-based digital rupee suggests that the cryptocurrency’s problems are not related to the underlying technology, but only to who can control it.
Choudhury believes that a balanced approach can be taken to differentiate the blockchain as a technology and the cryptocurrency as an asset class.
“These are two different and different topics that can be adopted independently of one another. While the blockchain is a technology, the cryptocurrency is an asset class. It will not be difficult to apply these two principles in their respective regions,” he said.
Despite fears of becoming a regulatory bomb in India, Coinbase, a global cryptocurrency exchange, recently announced that it will move some IT services to India as the company approaches its IPO next year.