India’s Rs 10K Cr in Cryptocurrency: What Happens If Govt Bans It?

The government has indicated it would bring in a bill soon that may ban the booming digital currency altogether.

(image: Aroop Mishra/The Quint)

(The interview was originally published on 17 March and has been reposted amid the rumoured ban on cryptocurrency)

Editor: Sandeep Suman
Camera: Shiv Kumar Maurya

India today has over 75 lakh cryptocurrency investors who’ve collectively poured in over Rs 10,000 crore.

The prices of a number of cryptocurrencies, especially Bitcoin, has been soaring. Currently the value of 1 Bitcoin stands at Rs 38.5 lakh, as of 19 February. However, a shadow of fear and uncertainty looms large over India’s crypto ecosystem as the government has indicated it is likely to bring in bill in the next instalment of the budget session that may ban the booming digital currency altogether.

The Quint spoke with Ajeet Khurana, former CEO, Zebpay, and angel investor, about the prevailing mood among investors, the future of cryptocurrency in India, the government’s concerns with cryptocurrency and what happens if the Centre brings a bill to ban it in India? Following are excerpts from the conversation.

What is the present mood among investors in this environment of uncertainty?

“We did see a fairly high degree of panic, and there were increase in (trade) volumes,” Khurana said. Highlighting the upbeat mood among investors globally, he added, “At any given point in Bitcoin’s history, there have been more people entering Bitcoin in the last few months than in the preceding year.”

Since Finance Minister Nirmala Sitharaman’s indication that a bill will likely be introduced in the budget session which may ban cryptocurrenct, Khurana said, “There is one segment which is unhappy, upset and has reached a state of paralysis.” 

Given that the government may ban cryptocurrency and is giving a window to get rid of it, what are the best options?

“This one aspect is most perplexing,” the former Zebpay CEO said, explaining that there is least clarity from the government’s side about how to dispose of one’s assets in the event that cryptocurrency is banned.

The worst outcome would be if the government was to say “we are confiscating cryptocurrency. That would be a confiscation of Rs 10,000 crore from 75 lakh people.”

Reports have suggested investors may get a three to six-month window to dispose of cryptocurrency in a way recommended by the government.

Many have questioned the underlying asset value of a cryptocurrency and whether Bitcoins are safe.

Khurana explains that there are three dimensions of safety:

1. Regulatory
2. Technological
3. Price – will it go bust one day?

“Just like traditional money, the ultimate backing of cryptocurrency lies in a very large number of people believing in it,” Khurana said.

The government has expressed several concerns about cryptocurrency. How would regulation, instead of a ban, address them?

Khurana said that the concerns of the government primarily arise from the fact that this isn't a government-administered asset.

Batting in favour of robust regulation instead of a ban, Khurana said all wallets require eKYC. So, all transactions and investments are easily monitored.

According to him, “The next best thing would be that instead of the government not controlling it...it knows absolutely everything.”

What would you advise the investors in this climate of uncertainty?

Khurana outlines three pieces if advice:

1. “Panic has never helped. I have panicked in the past, and it's never been a good idea.”

2. “Even if they come up with harsh regulations. I'm convinced that they'll soon relax it, and we'll be back on track.”

3. “Whatever we do, we have to be law-abiding.”