India’s Crypto-Clueless Regulators
Even those who vaguely follow the cryptocurrency markets (as I am sure many readers of the Mises Wire do) are likely to have seen the recent news on this front from India. The Indian government is proposing legislation to “ban” cryptocurrencies. Given the present segmentation of the Indian government, it is expected that this law will pass. In this article, I will consider some of the chief concerns that may prompt regulators to consider, and unfortunately implement, in some cases, prohibitions on cryptocurrencies and adjacent activities.
Fool Me Once…
Before delving into the evaluation of this ordinance, it is worth considering this law and the context surrounding it in more detail. Indian officials have been mulling over cryptocurrency restrictions for some time now. As some readers might remember, the Reserve Bank of India (RBI), India’s monetary authority, imposed a substantial level of restrictions on cryptocurrencies in April 2018. These restrictions interdicted all RBI-regulated entities from engaging with businesses dealing with cryptocurrencies or settling cryptocurrency payments.
In essence, this compelled domestic cryptocurrency exchanges to make considerable alterations to their business model, leave the country altogether, or shut down their businesses. Understandably upset, Indian cryptocurrency exchanges filed a flurry of petitions with the Indian Supreme Court, which, to the benefit of these businesses, lifted this April 2018 ban. The supreme court, however, left open the possibility of the Indian Parliament imposing formal legislation that would regulate, or even ban cryptocurrencies outright. That is precisely what the government is looking to do, with the proposed law suggesting the penalization of anyone mining, trading, or even holding cryptocurrencies.
A Closer Look
Given the history of widespread corruption at all levels of Indian government that has persisted since its s
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