New chapter in India crypto ban debate – Massive brain drain anticipated


New chapter in India crypto ban debate – Massive brain drain anticipated

The latest news from India is that executives for crypto related entities are in the process of moving offshore. The rather drastic consequence is a direct result of a proposed law that would criminalize all things crypto in “the first large democracy to ban an innovative technology such as crypto.” 10-year jail sentences would apply to anyone who “mines, generates, holds, sells, transfers, disposes of, issues or deals in cryptocurrencies.”

As reported by CoinTelegraph, Rahul Jain, an employee at formerly domestic exchange Bitbns, told the Economic Times:

As a startup from India, we always wanted to serve from India, but this recent complication has made it difficult for domestic crypto exchanges to operate their businesses in India. So, we are now an Estonia-based company, and any Indian law to criminalize crypto will not impact us.

The “Crypto Conundrum” in India has been raging since 2017, when the Reserve Bank of India (RBI) ordered its banking members to cease and desist any manner of banking services for the crypto community. A few firms relocated offshore, while others closed their doors for good. Lawsuits resulted and found their way to the Supreme Court, which had delayed hearings until the government issued proposed new legislation to deal with all things crypto in India. The court has admonished the RBI for its rash actions, but new hearings have been scheduled for January.

In the meantime, various IT associations and lobbying groups have come forward with reports that purport that the Indian government is making a serious mistake with its plan to criminalize anything to do with the Crypto-verse that originates from within the country. One study concludes that the country is saying goodbye to a $13 billion industry. Another report, issued by the Steering Committee on Fintech-Related Issues, included a section in its 150-page discourse, devoted entirely to digital currencies and tokens. The report spoke in very favorable terms with regard to cryptos and Initial Coin Offerings (ICOs), finding them as “revolutionizing the global fintech landscape.”

Nischal Shetty, CEO and founder of well-known Indian exchange WazirX, claims that proposed legislation will “erode the wealth of over 5 million Indians who own crypto assets worth thousands of crores”. He added further that:

The arbitrary decision to criminalize crypto-asset investment would destabilize existing businesses that have been operating legitimately and make the country an unfortunate pioneer in its role as the first large democracy to ban an innovative technology such as crypto.

The overriding concern now is that companies are not waiting for the court ruling or for the final adoption of regulations to be promulgated. The proposed consequences are so severe that no one seems willing to take a “wait-and-see” attitude. As one pundit wrote:

India is seeing the first signs of an anticipated brain drain, as the government mulls stark legislation that would criminalize domestic cryptocurrency investments.

Shetty fears his home country is making a major step backwards. He concludes:

As a country largely reliant on the services sector, India will lose its edge as a technological power if the ban on crypto is enforced. Shunning this industry will mean massive job losses and a brain drain […] Crypto is predicted to be a $10 trillion industry in the next five years, and if we are to achieve our Prime Minister’s goal being a $5 trillion economy, then crypto is integral to that vision.

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New chapter in India crypto ban debate – Massive brain drain anticipated

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