- Balaji Srnivasan, the former Coinbase Chief Technology Officer, has warned that India banning Bitcoin is akin to banning the internet
- A ban on cryptos will redirect trade revenue to other Asian markets which will cost the Indian economy trillions of dollars, he warned
- The cryptocurrency and Regulations of the Official Digital Currency Bill seek to prohibit all Crypto-currencies in India and lay a framework for a new digital currency regulated by the Reserve Bank of India
Speaking on the recent ban on cryptos in India, Balaji Srnivasan, former CTO at Coinbase has opined that India’s proposed plan to ban Bitcoin and other crypto-currencies is as good as banning the “financial internet.”
In an interview with The CapTable, the experienced ex-CTO said that placing a total ban on Bitcoin and other cryptos will inevitably lead to a redirection of trade revenue to other Asian markets like Thailand, Korea, or even Vietnam which will cost the Indian economy up to trillions of dollars.
He explained that
It’s really important that the ban (India’s plan to ban owning, trading, mining, or investing in cryptocurrency) should not go through. It would be a trillion-dollar mistake for India, without exaggeration.
India’s Proposed Plan To Ban
A senior official of the Finance Ministry informed Bloomberg that the upcoming ban was in the pipeline but holders of cryptocurrencies will have a three to six years window to convert their holdings to legal tender.
In late January, the Cryptocurrency and Regulations of Official Digital Currency Bill was introduced, laying the groundwork for an official digital currency controlled by the Reserve Bank of India. This bill also seeks to prohibit all other crypto-currencies in India.
This bill is currently fronted by Prime Minister Narendra Midubof the Bharatiya Janata Party which exercises a majority control of India’s two Houses of Parliament. Gleaning from the above, it can be logically inferred that this bill could become law in the nearest future.
On The Flipside
- Bitcoin enjoys legality in the US with even the Office of the Comptroller of Currencies granting financial institutional the powers to carry out transactions and settlements in BTC and other crypto-currencies
- Bitcoin hits $50k, enjoying both institutional and mainstream support
- Although experiencing a period of consolidation, Bitcoin has been predicted to hit $60k in the near future
Effects of the Proposed Ban
While India has made several development strides technologically, this move is seen as a step in the wrong direction. Srinivasan suggested that India could end up 20% poorer than it otherwise would be over the next five years, should the ban go through. He said that a cryptocurrency ban would effectively stop the “financial internet” from taking root in India:
India could get 20% poorer from what it could have achieved over the five-year term. It is almost like banning the internet for 5 years. The losses add up a lot. It would be a reversal of economic liberalization in many ways. It would basically be banning the financial internet from entering the country. And it wouldn’t even achieve the desired objective.
While this is a drastic step, the harsh effect may not be experienced by individual holders because of the decentralized nature of cryptos, coupled with the use of digital wallets and private keys. With a little tweaking, Indians can find a way around this proposed ban.