The government aims to present a bill to ban Crypto in this Winter Session of the Parliament in 2021. Nothing has been said about the bill except that it “aims to ban all private cryptocurrencies, with some exceptions.”. This article aims to help you understand what we know about the ban as of now. Offers suggestions on what you can do about it and maybe even profit from this downfall.
Crypto Ban in India
The ban hasn’t been enacted. All we know is that it is a proposal for the Winter Session.
If the ban gets followed – it would imply that $10B of wealth gets eroded away. (as Indian investment in Cryptocurrencies have risen to that level) On a micro-level – investors can face losses from a couple of thousands to even crores. Keeping these three aspects in mind, we believe that crypto will be regulated and not banned.
Regulation on Crypto
Sidharth Sogani says, “ I don’t believe it will be an outright ban” – we agree.
The government will most likely regulate crypto(the how’s of which are unknown). The most important reason is that the average crypto holder in India ranges from 25-35 years of age; Banning crypto means letting go of that voter base.
The RBI Governor has already said that Blockchain technology has the potential to grow and it will grow. The real question is ‘how’ – will it be controlled by the government? Will most currencies be banned? or will the exchange be regulated(in whatever manner) so as to ensure the currencies trade close to their ‘intrinsic value’ – whatever it may be.
What we think is going to happen is that Cryptocurrencies(which will survive) are going to be stores of value. These will be treated as an asset and not as a ‘legal tender’. The government, as per Dr. Rajan(Former Governor of the RBI) can/should make the legal tender transactions more attractive and let these currencies be a small part of the portfolio of the investors. This sounds feasible. The government is not going to hand over its authority over economic decisions. If crypto becomes legal tender, then monetary policies become useless.
Should you buy Crypto?
India isn’t like China – the government in India will not “crackdown” on Cryptocurrency. Times like these require you to do the right thing – be conservative. In all likelihood, this ‘regulation’ will be enforced on ‘meme coins’ and not actual cryptocurrencies like Bitcoin or maybe even Ethereum.
In China after the government stopped all activities related to Cryptocurrencies, the USA took over mining and the big firms in China probably still hold their currencies.
Our advice would be to liquidate the ‘meme coin’ holdings like Dodge( at least temporarily) and keep it in cash and maybe even liquidate a portion of your position in Bitcoin and Ethereum, the so-called, “bluechip cryptos”.
This is boring, but unless you are a food blogger, you have to do this. Money-Making is, in most cases … boring.
Disclaimer: the views expressed by the writer are their own and not of the website or the management. Readers are adviced to consult a wealth manager before they take a decision.