The government can ban the legitimate use of crypto, but that would mean giving further impetus to a host of crypto scams
What remains to be seen is the contours of the ban, whether the government bans only trading of cryptocurrencies, or even their holding and mining
GST is levied on the crypto transaction charges, brokerage etc. However, if the basic consideration is made liable to GST at 18% the entire business will shift outside India
As an impending ban on cryptocurrencies in India looms large over all stakeholders, some are still hoping for the government to engage the industry players in a dialogue.
Kumar Gaurav, founder and CEO at London-based crypto-friendly neobank Cashaa said, “We are certain that the government would definitely involve industry players while deciding the framework for the industry. And about the current speculations, they have been there for everything new that has ever disrupted any existing conventional formats.”
He also felt that no government has the technology to ban, or rather enforce a ban on crypto since the control or authority over crypto doesn’t rest with any country, individual or entity.
What the government can do is ban the legitimate use of crypto, but that would mean giving further impetus to a host of crypto scams. “This will not be a win for anybody. Investors from outside India have invested heavily in crypto startups in India. There will be a huge loss to the economy. Also, this might lead to the rise of alternate offline markets which will be difficult for the government also to track,” Gaurav told Inc42.
Scope Of The Potential Ban Under Debate
The contours of the ban aren’t known yet. Those hoping talks of a ban to be ‘rumours’ were in for another rude shock last month, when RBI governor Shaktikanta Das reiterated the central bank’s position on cryptocurrencies. “We have major concerns from a financial stability angle,” he said.
What remains to be seen is whether the government bans only the trading of cryptocurrencies, or even holding and mining. Banning holding cryptos is a long shot, mostly because of the troubles that may come with its enforcement. According to estimates, over 7 Mn Indians hold more than $1 Bn worth in cryptocurrencies, and many such investors have also moved their assets to crypto wallets outside.
“In case, the government decides to move ahead with the ban, the first ones to be affected would be the crypto exchanges in India. They will have to shut operations in the country. But given most of them are global exchanges, they will continue to operate their global platforms,” said Ashish Singhal, CEO and cofounder at CoinSwitch Kuber.
“If the government does not illegalize holding then investors can continue with P2P transfers offline. But if the government bans the holding of cryptocurrencies as well then P2P trade would also be viewed as illegal in the eyes of the law,” he added.
It is worth noting that P2P or peer-to-peer transfers of…