Opinion: A ban on cryptocurrencies in India would be a $1 trillion mistake

Balaji Srinivasan, the former Coinbase chief technology officer, said that banning cryptocurrencies in India would entail high alternative costs for the country.

Banning crypto would be a reversal of economic liberalization in many ways. It would basically be banning the financial internet from entering the country. It’d be a trillion dollar mistake for India. And there are cheaper ways of achieving the desired goals. https://t.co/WYFbHIN6kk

— balajis.com (@balajis) February 15, 2021

According to the expert, potential restrictions on digital assets would reverse economic liberalization, effectively amounting to blocking the “financial internet” in the country.

“It is very important that the forthcoming ban on possession, trading, mining and investment in cryptocurrency does not come into force. For India this would be a $1 trillion mistake, no exaggeration,” Srinivasan said.

He is confident that the ban would not help authorities achieve the desired goal. In the expert’s view, the move would lead to capital outflows from the country and the development of the industry abroad.

“A ban on digital assets because of crimes linked to cryptocurrencies is akin to banning driving to deter drunk drivers,” Srinivasan added.

If the bill is enacted, the investor argues, India would be 20% poorer over the next five years.

The Parliament will consider the government bill to ban digital assets during the upcoming budget session. The country plans to issue its own digital currency.

Back in 2018, India banned banks and financial institutions from providing services to companies dealing with cryptocurrencies. In March last year, the Supreme Court lifted the restriction.

In December 2020, India’s Central Bureau of Economic Intelligence proposed to levy a tax on cryptocurrency trading under the goods and services tax at 18%.

In February 2021, Bloomberg reported that the country’s authorities will ensure a smooth transition to a ban on digital assets and would allow holders to unwind their positions.

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