Will India Really Ban Crypto? Experts Say It's Unlikely
- Another proposed law threatens the stability of India's growing cryptocurrency industry. What's next?

The Parliament of India said on Friday that it was considering the passage of a bill that would “prohibit all private Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the networks which are used to authenticate blockchain technology. Cryptocurrencies can be thought of as systems that accept online payments which are denoted as “tokens.” Tokens are represented as internal ledger entries in blockchain technology while the term crypto is used to depict cryptographic methods and encryption algorithms such as public-private key pairs, various hashing functions, and an elliptical curve. Every cryptocurrency transaction that occurs is logged in a web-based ledger with blockchain technology.These then must be approved by a disparate network of individual nodes (computers that maintain a copy of the ledger). For every new block generated, the block must first be authenticated and confirmed ‘approved’ by each node, which makes forging the transactional history of cryptocurrencies nearly impossible. The World’s First CryptoBitcoin became the first blockchain-based cryptocurrency and to this day is still the most demanded cryptocurrency and the most valued. Bitcoin still contributes the majority of the overall cryptocurrency market volume, though several other cryptos have grown in popularity in recent years.Indeed, out of the wake of Bitcoin, iterations of Bitcoin became prevalent which resulted in a multitude of newly created or cloned cryptocurrencies. Contending cryptocurrencies that emerged after Bitcoin’s success is referred to as ‘altcoins’ and they refer to cryptocurrencies such as Bitcoin, Peercoin, Namecoin, Ethereum, Ripple, Stellar, and Dash. Cryptocurrencies promise a wide range of technological innovations that have yet to be structured into being. Simplified payments between two parties without the need for a middle man is one aspect while leveraging blockchain technology to minimize transaction and processing fees for banks is another. Of course, cryptocurrencies have their disadvantages too. This includes issues of tax evasion, money laundering, and other illicit online activities where anonymity is a dire ingredient in solicitous and fraudulent activities. By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the networks which are used to authenticate blockchain technology. Cryptocurrencies can be thought of as systems that accept online payments which are denoted as “tokens.” Tokens are represented as internal ledger entries in blockchain technology while the term crypto is used to depict cryptographic methods and encryption algorithms such as public-private key pairs, various hashing functions, and an elliptical curve. Every cryptocurrency transaction that occurs is logged in a web-based ledger with blockchain technology.These then must be approved by a disparate network of individual nodes (computers that maintain a copy of the ledger). For every new block generated, the block must first be authenticated and confirmed ‘approved’ by each node, which makes forging the transactional history of cryptocurrencies nearly impossible. The World’s First CryptoBitcoin became the first blockchain-based cryptocurrency and to this day is still the most demanded cryptocurrency and the most valued. Bitcoin still contributes the majority of the overall cryptocurrency market volume, though several other cryptos have grown in popularity in recent years.Indeed, out of the wake of Bitcoin, iterations of Bitcoin became prevalent which resulted in a multitude of newly created or cloned cryptocurrencies. Contending cryptocurrencies that emerged after Bitcoin’s success is referred to as ‘altcoins’ and they refer to cryptocurrencies such as Bitcoin, Peercoin, Namecoin, Ethereum, Ripple, Stellar, and Dash. Cryptocurrencies promise a wide range of technological innovations that have yet to be structured into being. Simplified payments between two parties without the need for a middle man is one aspect while leveraging blockchain technology to minimize transaction and processing fees for banks is another. Of course, cryptocurrencies have their disadvantages too. This includes issues of tax evasion, money laundering, and other illicit online activities where anonymity is a dire ingredient in solicitous and fraudulent activities. Read this Term as part of a plan to launch a central bank digital currency (CBDC). The bill, called the Cryptocurrency and Regulation Regulation Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority (FCA), the US’ Securities and Exchange Commission (SEC), Australian Security and Investment Commission (ASIC), and the Cyprus Securities and Exchange Commission (CySEC) are the most widely dealt with authorities in the FX industry.In its most basic sense, regulators help ensure the filing of reports and transmission of data to help police and monitor activity by brokers. Regulators also serve as a countermeasure against market abuse and malpractice by brokers. Brokers adhering to a list of mandated rules are authorized to provide investment activities in a given jurisdiction. By extension, many unauthorized or unregulated entities will also seek to market their services illegally or function as a clone of a regulated operation.Regulators are essential in snuffing out these scam operations as they prevent significant risks for investors.In terms of reporting, brokers are also required to regularly file reports about their clients’ positions to the relevant regulatory authorities. The most-recent regulatory push in the aftermath of the Great Financial Crisis of 2008 has delivered a material shift in the regulatory reporting landscape.Brokers typically outsource the reporting to other companies which are connecting the trade repositories used by regulators to the broker’s systems and are handling this crucial element of compliance.Beyond FX, regulators help reconcile all matters of oversight and are watchdogs for each industry. With ever-changing information and protocols, regulators are always working to promote fairer and more transparent business practices from brokers or exchanges. Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority (FCA), the US’ Securities and Exchange Commission (SEC), Australian Security and Investment Commission (ASIC), and the Cyprus Securities and Exchange Commission (CySEC) are the most widely dealt with authorities in the FX industry.In its most basic sense, regulators help ensure the filing of reports and transmission of data to help police and monitor activity by brokers. Regulators also serve as a countermeasure against market abuse and malpractice by brokers. Brokers adhering to a list of mandated rules are authorized to provide investment activities in a given jurisdiction. By extension, many unauthorized or unregulated entities will also seek to market their services illegally or function as a clone of a regulated operation.Regulators are essential in snuffing out these scam operations as they prevent significant risks for investors.In terms of reporting, brokers are also required to regularly file reports about their clients’ positions to the relevant regulatory authorities. The most-recent regulatory push in the aftermath of the Great Financial Crisis of 2008 has delivered a material shift in the regulatory reporting landscape.Brokers typically outsource the reporting to other companies which are connecting the trade repositories used by regulators to the broker’s systems and are handling this crucial element of compliance.Beyond FX, regulators help reconcile all matters of oversight and are watchdogs for each industry. With ever-changing information and protocols, regulators are always working to promote fairer and more transparent business practices from brokers or exchanges. Read this Term of Official Digital Currency Bill, is currently being reviewed as part of a budget session in the upper house of India’s Parliament.
But, can the Indian government, or any government, for that matter, really ban all non-government cryptocurrencies?
According to a recent article, Kumar Guarav, the Founder and Chief Executive of Cashaa, does not think so. In fact, Guarav told CoinTelegraph that "there is no way any government" can ban crypto completely. Still, the government can make life difficult for cryptocurrency hodlers.
"They can certainly ban the legitimate use of crypto which will only make it difficult for a common person who does not understand it to get involved in it," said Gaurav. “However, what we understand is that the Indian government is trying to crack down on scams that are running in the name of Bitcoin." In other words, the Indian government may not be diametrically opposed to the usage of cryptocurrencies, just the crimes associated with them.
Nischal Shetty, Chief Executive of cryptocurrency exchange, WazirX, laid out “a few scenarios of the crypto bill: 1) It may not come up in this session of Parliament, 2) It may come up but is referred to a standing committee, 3) It may come up and is passed in its current form.”
Day 822
— Nischal (WazirX) ⚡️ (@NischalShetty) January 31, 2021
A few scenarios of the crypto Bill:
1. It may not come up in this session of Parliament
2. It may come up but is referred to a standing committee
3. It may come up and is passed in its current form
Each scenario outcome described in tweets below.#IndiaWantsCrypto
”[The] Road to Regulation Is Not Easy”
While Shetty described the first scenario as “the best-case scenario right now,” he also said that “we’ll need to push harder on educating our lawmakers about the pros of regulating crypto. India cannot miss this technology & value creation” that the crypto industry would provide.
Similarly, Shetty described the second scenario as a “good case” for crypto. However, the third scenario could “be a best or worst case depending on [the] bill.”
“If the bill has a ban on crypto as a ‘payment’ but allows trading and holding of crypto then [it will] Rocket,” he wrote. If the Bill has [a] complete ban then as an industry we will have to fight to get this reversed. [The] road to regulation is not easy!”
However, Shetty is confident that crypto will triumph in the end: “take a deep breath and ask yourself,” he wrote on Twitter. “Will the Government of India really make the 7 Million+ Indian crypto retail investors lose $1 Billion+ of wealth? Will they want to lose out on Crypto innovation? Be smart and take an informed decision. Do not panic.”
Like Shetty, Cashaa’s Kumar Guarav said that “we are positive that the government will come up with regulations and policies that will put control on the scams” while allowing the industry to “grow and thrive.”
Still, the government discourse on cryptocurrencies could present some problems for the industry. Previously, on January 31st, Nishal wrote that “Crypto regulation is going to be a hurdles race. We’ll encounter many roadblocks. We’ll jump over some, hit some, fall down at times. But, we’ll never give up till we reach our destination. Let’s do this together. Flexed biceps.”
India’s Love-Hate Relationship with Crypto Goes Way Back
While that may be the case, this is not the first time a proposed bill has threatened to upend the cryptocurrency ecosystem in India, or, indeed, that an Indian law has seriously stifled the growth of the crypto industry in the country.
For example, a proposed bill that was making the rounds through India’s legislative system in 2019 would have required a 10-year prison sentence for anyone that mined, held or sold cryptocurrencies. Fortunately, the bill was eventually dropped.
Additionally, last year, the country overturned a central bank-imposed ban on the formation of working relationships between banks and companies that operate in the cryptocurrency industry, including exchanges.
Furthermore, Finance Magnates reported earlier this year that India was considering placing an 18 percent tax on cryptocurrencies. In August of 2020, reports emerged that the Indian government was consulting with the law ministry, ministry of information and technology, and the Reserve Bank of India (RBI) to draft a framework that could be used to ban cryptocurrency trading in India.
The Parliament of India said on Friday that it was considering the passage of a bill that would “prohibit all private Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the networks which are used to authenticate blockchain technology. Cryptocurrencies can be thought of as systems that accept online payments which are denoted as “tokens.” Tokens are represented as internal ledger entries in blockchain technology while the term crypto is used to depict cryptographic methods and encryption algorithms such as public-private key pairs, various hashing functions, and an elliptical curve. Every cryptocurrency transaction that occurs is logged in a web-based ledger with blockchain technology.These then must be approved by a disparate network of individual nodes (computers that maintain a copy of the ledger). For every new block generated, the block must first be authenticated and confirmed ‘approved’ by each node, which makes forging the transactional history of cryptocurrencies nearly impossible. The World’s First CryptoBitcoin became the first blockchain-based cryptocurrency and to this day is still the most demanded cryptocurrency and the most valued. Bitcoin still contributes the majority of the overall cryptocurrency market volume, though several other cryptos have grown in popularity in recent years.Indeed, out of the wake of Bitcoin, iterations of Bitcoin became prevalent which resulted in a multitude of newly created or cloned cryptocurrencies. Contending cryptocurrencies that emerged after Bitcoin’s success is referred to as ‘altcoins’ and they refer to cryptocurrencies such as Bitcoin, Peercoin, Namecoin, Ethereum, Ripple, Stellar, and Dash. Cryptocurrencies promise a wide range of technological innovations that have yet to be structured into being. Simplified payments between two parties without the need for a middle man is one aspect while leveraging blockchain technology to minimize transaction and processing fees for banks is another. Of course, cryptocurrencies have their disadvantages too. This includes issues of tax evasion, money laundering, and other illicit online activities where anonymity is a dire ingredient in solicitous and fraudulent activities. By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the networks which are used to authenticate blockchain technology. Cryptocurrencies can be thought of as systems that accept online payments which are denoted as “tokens.” Tokens are represented as internal ledger entries in blockchain technology while the term crypto is used to depict cryptographic methods and encryption algorithms such as public-private key pairs, various hashing functions, and an elliptical curve. Every cryptocurrency transaction that occurs is logged in a web-based ledger with blockchain technology.These then must be approved by a disparate network of individual nodes (computers that maintain a copy of the ledger). For every new block generated, the block must first be authenticated and confirmed ‘approved’ by each node, which makes forging the transactional history of cryptocurrencies nearly impossible. The World’s First CryptoBitcoin became the first blockchain-based cryptocurrency and to this day is still the most demanded cryptocurrency and the most valued. Bitcoin still contributes the majority of the overall cryptocurrency market volume, though several other cryptos have grown in popularity in recent years.Indeed, out of the wake of Bitcoin, iterations of Bitcoin became prevalent which resulted in a multitude of newly created or cloned cryptocurrencies. Contending cryptocurrencies that emerged after Bitcoin’s success is referred to as ‘altcoins’ and they refer to cryptocurrencies such as Bitcoin, Peercoin, Namecoin, Ethereum, Ripple, Stellar, and Dash. Cryptocurrencies promise a wide range of technological innovations that have yet to be structured into being. Simplified payments between two parties without the need for a middle man is one aspect while leveraging blockchain technology to minimize transaction and processing fees for banks is another. Of course, cryptocurrencies have their disadvantages too. This includes issues of tax evasion, money laundering, and other illicit online activities where anonymity is a dire ingredient in solicitous and fraudulent activities. Read this Term as part of a plan to launch a central bank digital currency (CBDC). The bill, called the Cryptocurrency and Regulation Regulation Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority (FCA), the US’ Securities and Exchange Commission (SEC), Australian Security and Investment Commission (ASIC), and the Cyprus Securities and Exchange Commission (CySEC) are the most widely dealt with authorities in the FX industry.In its most basic sense, regulators help ensure the filing of reports and transmission of data to help police and monitor activity by brokers. Regulators also serve as a countermeasure against market abuse and malpractice by brokers. Brokers adhering to a list of mandated rules are authorized to provide investment activities in a given jurisdiction. By extension, many unauthorized or unregulated entities will also seek to market their services illegally or function as a clone of a regulated operation.Regulators are essential in snuffing out these scam operations as they prevent significant risks for investors.In terms of reporting, brokers are also required to regularly file reports about their clients’ positions to the relevant regulatory authorities. The most-recent regulatory push in the aftermath of the Great Financial Crisis of 2008 has delivered a material shift in the regulatory reporting landscape.Brokers typically outsource the reporting to other companies which are connecting the trade repositories used by regulators to the broker’s systems and are handling this crucial element of compliance.Beyond FX, regulators help reconcile all matters of oversight and are watchdogs for each industry. With ever-changing information and protocols, regulators are always working to promote fairer and more transparent business practices from brokers or exchanges. Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority (FCA), the US’ Securities and Exchange Commission (SEC), Australian Security and Investment Commission (ASIC), and the Cyprus Securities and Exchange Commission (CySEC) are the most widely dealt with authorities in the FX industry.In its most basic sense, regulators help ensure the filing of reports and transmission of data to help police and monitor activity by brokers. Regulators also serve as a countermeasure against market abuse and malpractice by brokers. Brokers adhering to a list of mandated rules are authorized to provide investment activities in a given jurisdiction. By extension, many unauthorized or unregulated entities will also seek to market their services illegally or function as a clone of a regulated operation.Regulators are essential in snuffing out these scam operations as they prevent significant risks for investors.In terms of reporting, brokers are also required to regularly file reports about their clients’ positions to the relevant regulatory authorities. The most-recent regulatory push in the aftermath of the Great Financial Crisis of 2008 has delivered a material shift in the regulatory reporting landscape.Brokers typically outsource the reporting to other companies which are connecting the trade repositories used by regulators to the broker’s systems and are handling this crucial element of compliance.Beyond FX, regulators help reconcile all matters of oversight and are watchdogs for each industry. With ever-changing information and protocols, regulators are always working to promote fairer and more transparent business practices from brokers or exchanges. Read this Term of Official Digital Currency Bill, is currently being reviewed as part of a budget session in the upper house of India’s Parliament.
But, can the Indian government, or any government, for that matter, really ban all non-government cryptocurrencies?
According to a recent article, Kumar Guarav, the Founder and Chief Executive of Cashaa, does not think so. In fact, Guarav told CoinTelegraph that "there is no way any government" can ban crypto completely. Still, the government can make life difficult for cryptocurrency hodlers.
"They can certainly ban the legitimate use of crypto which will only make it difficult for a common person who does not understand it to get involved in it," said Gaurav. “However, what we understand is that the Indian government is trying to crack down on scams that are running in the name of Bitcoin." In other words, the Indian government may not be diametrically opposed to the usage of cryptocurrencies, just the crimes associated with them.
Nischal Shetty, Chief Executive of cryptocurrency exchange, WazirX, laid out “a few scenarios of the crypto bill: 1) It may not come up in this session of Parliament, 2) It may come up but is referred to a standing committee, 3) It may come up and is passed in its current form.”
Day 822
— Nischal (WazirX) ⚡️ (@NischalShetty) January 31, 2021
A few scenarios of the crypto Bill:
1. It may not come up in this session of Parliament
2. It may come up but is referred to a standing committee
3. It may come up and is passed in its current form
Each scenario outcome described in tweets below.#IndiaWantsCrypto
”[The] Road to Regulation Is Not Easy”
While Shetty described the first scenario as “the best-case scenario right now,” he also said that “we’ll need to push harder on educating our lawmakers about the pros of regulating crypto. India cannot miss this technology & value creation” that the crypto industry would provide.
Similarly, Shetty described the second scenario as a “good case” for crypto. However, the third scenario could “be a best or worst case depending on [the] bill.”
“If the bill has a ban on crypto as a ‘payment’ but allows trading and holding of crypto then [it will] Rocket,” he wrote. If the Bill has [a] complete ban then as an industry we will have to fight to get this reversed. [The] road to regulation is not easy!”
However, Shetty is confident that crypto will triumph in the end: “take a deep breath and ask yourself,” he wrote on Twitter. “Will the Government of India really make the 7 Million+ Indian crypto retail investors lose $1 Billion+ of wealth? Will they want to lose out on Crypto innovation? Be smart and take an informed decision. Do not panic.”
Like Shetty, Cashaa’s Kumar Guarav said that “we are positive that the government will come up with regulations and policies that will put control on the scams” while allowing the industry to “grow and thrive.”
Still, the government discourse on cryptocurrencies could present some problems for the industry. Previously, on January 31st, Nishal wrote that “Crypto regulation is going to be a hurdles race. We’ll encounter many roadblocks. We’ll jump over some, hit some, fall down at times. But, we’ll never give up till we reach our destination. Let’s do this together. Flexed biceps.”
India’s Love-Hate Relationship with Crypto Goes Way Back
While that may be the case, this is not the first time a proposed bill has threatened to upend the cryptocurrency ecosystem in India, or, indeed, that an Indian law has seriously stifled the growth of the crypto industry in the country.
For example, a proposed bill that was making the rounds through India’s legislative system in 2019 would have required a 10-year prison sentence for anyone that mined, held or sold cryptocurrencies. Fortunately, the bill was eventually dropped.
Additionally, last year, the country overturned a central bank-imposed ban on the formation of working relationships between banks and companies that operate in the cryptocurrency industry, including exchanges.
Furthermore, Finance Magnates reported earlier this year that India was considering placing an 18 percent tax on cryptocurrencies. In August of 2020, reports emerged that the Indian government was consulting with the law ministry, ministry of information and technology, and the Reserve Bank of India (RBI) to draft a framework that could be used to ban cryptocurrency trading in India.