Shaktikanta Das, former Secretary of Economic Affairs of India, who is currently a member of the 15th Finance Commission, claimed in an interview with Quartz India that cryptocurrencies should be banned since it is impossible “to regulate [them] effectively,” as reported on March 12.
Das, a retired officer of the Indian Administrative Service (IAS), has participated in the development of India’s cryptocurrency regulations as a member of the Securities and Exchange Board of India (SEBI) and Reserve Bank of India (RBI). In April 2017, Das headed the first government panel aiming to formulate cryptocurrency regulations for the country.
According to Das, the main problem with cryptocurrencies is that they are not backed by any assets. In an interview with Quartz, Das unfavorably compared shares that represent the value of a real company to cryptocurrency assets that are “created out of vacuum” and “thin air.” Das argued that RBI is the only body that is legally allowed to issue currency in India, hence digital currencies are illegal.
Shaktikanta Das concluded that there is no way to regulate cryptocurrency “effectively,” and that is why it “should not be allowed at all.”
“Let us accept that it would not be possible to regulate it effectively. Because they will do transactions from their houses. You cannot enter every home to check what transactions are going on. So, I think this is a serious challenge, and this should not be allowed at all.”
On the other hand, some experts from India believe that the full ban on cryptocurrency would only bring more problems. Anirudh Rastogi, the managing partner at the TRA law firm, said to Quartz that enforcing a ban would make tracking cryptocurrency transactions even harder for the government.
Rastogi also claims that India cannot simply ban cryptocurrencies when “two or three of the largest economies are giving it legitimacy,” because that would make the country “an outlier”, which, in turn, will “have an adverse impact” on the financial system.
The government of India has taken a negative stance towards cryptocurrencies in recent months. On Feb. 28, cryptocurrency exchanges BTCXIndia and ETHEXIndia halted trading activities, reportedly resulting from government pressure.
Back in 2017, India’s Ministry of Finance claimed that Bitcoin and the other digital currencies are “like Ponzi schemes” and warned investors about the high risks of getting involved in cryptocurrencies.