- India is reportedly mulling a ban on IP addresses of cryptocurrency exchanges.
- The reports come as the government prepares to introduce the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021.
- The government recently suggested that it would not outright ban cryptocurrencies.
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More bad news for crypto users in India.
India Crypto Crush Ongoing
The Indian government may block the IP addresses of cryptocurrency firms and exchanges, according to recent reports.
Local news outlet Business Today covered the update, amid ongoing speculation surrounding the government’s stance on cryptocurrencies. The government will soon introduce the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, which is thought to include a blanket ban on all cryptocurrencies.
Earlier this month, a senior government official told Reuters that an incoming cryptocurrency ban was very likely. They also said that holding cryptocurrencies would be punishable by up to 10 years in prison, in what would be one of the toughest policies in the world.
In January, the government laid down an agenda proposing a ban on “private cryptocurrencies” like Bitcoin as it prepares to build a central bank digital currency. The Securities and Exchange Board of India (SEBI) has since advised stock promoters to exit their crypto positions before raising funds.
A ban on crypto exchanges would be another crush on the space if implemented. Recently, the government took a similar move in hitting out against Chinese mobile apps and pornography. Hundreds of websites falling under the two categories are now inaccessible in the country.
Loopholes to Possible Ban
It’s unclear what an exchange ban would mean for automated market makers like Uniswap, which is accessible through IPFS. Moreover, experts have pointed out that Virtual Private Networks (VPNs) could be used to circumvent any ban. One source told local publication Business Standard:
“Various routes—like VPNs, peer-to-peer trading, using cash to buy/sell cryptocurrencies and use wallets outside India to store and transfer cryptos, using part of the money permitted to send abroad for investment within the liberalised remittance scheme limit of $250,000 can be diverted for buying cryptocurrencies—remain loopholes”
Despite the fears, Indian authorities have attempted to quash concerns. Speaking at India Today Conclave, Finance Minister Nirmala Sitharaman suggested that the government would permit certain uses of cryptocurrencies and the blockchain technology they’re underpinned by.
“We are very clear that we are not shutting all options. We will allow certain windows for people to do experiments on blockchain, Bitcoins, or cryptocurrency,” she said.
It’s estimated that India is home to around 7 million cryptocurrency holders. A full ban could send prices tumbling.
Disclosure: At the time of writing, the author of this feature had exposure to UNI in a cryptocurrency index.
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