Why India’s Plan to Ban Cryptocurrency will Backfire?

Bitcoin tumbles from record highs as India eyes crypto banIndia plans to propose a law banning cryptocurrencies, fining anyone trading in the country, or even holding such digital assets. This bill could potentially criminalize possession, issuance, mining, trading, and transferring crypto-assets.If this Law officially passes, India would be the first major economy to make holding cryptocurrencies illegal. China has banned crypto mining and trading but does not penalize possession.India’s banning of virtual currencies such as Bitcoin is in line with building a framework for an official national digital currency named Lakshmi or Lakshmi Coin. This means investors will not be able to participate in the booming Bitcoin (Digital Gold), missing out on the crypto revolution.Bill would give crypto holders six months to liquidate their crypto holdings. Currently, Around 8 million investors hold $1.4 B in Crypto.India’s monetary policy regulator had in 2018 banned crypto transactions after a string of frauds in the months following Prime Minister Narendra Modi’s sudden decision to ban 80% of the nation’s currency. Cryptocurrency exchanges responded with a lawsuit in the Supreme Court in September and won respite in March 2020.100 Days No internetModi government is also widely unpopular for policing the internet and causing internet shutdowns in several locations.Cryptocurrency is a payment mechanism that doesn’t require a central authority.Cryptocurrencies are prone to massive volatilities.Money can flow easily across border making it difficult to track every transactionTax Evasion and Money Laundering: Bitcoin transactions are encrypted and while they can be tracked by involved parties, bitcoin provides a way to keep money and transactions away from the prying eye of the regulators. There is a risk that it could be used to fund crime or illicit terrorist activity — another reason is that it can be a route to circumvent capital controls.Every country that has tried to…