Is the future of cryptocurrency in India hanging in the balance? A recent resolution by the Swadeshi Jagran Manch (SJM), a prominent economic and political organization with ties to the Rashtriya Swayamsevak Sangh (RSS), has ignited fresh debate about the legality and viability of cryptocurrencies in the nation. Let’s dive into the details of this developing situation and understand what it could mean for the burgeoning Indian crypto market.
SJM’s Stance: A Complete Crypto Ban for India
According to reports, the Swadeshi Jagran Manch (SJM) didn’t mince words at its 15th Rashtriya Sabha held in Gwalior. The organization, as stated by co-convenor Ashwani Mahajan, has formally called for a total and immediate ban on all cryptocurrency-related activities for Indian residents. This includes:
- Buying Cryptocurrencies
- Selling Cryptocurrencies
- Investing in Cryptocurrencies
- Dealing in Cryptocurrencies in any other form
This isn’t just a suggestion; the SJM resolution demands swift action, urging the Indian government to implement this ban without delay.
What’s the Rationale Behind SJM’s Push for a Ban?
The SJM’s resolution outlines several key reasons for their hardline stance against cryptocurrencies. They argue that recognizing and allowing cryptocurrencies in India could open a Pandora’s Box of economic and security risks. Here’s a breakdown of their primary concerns:
-
Excessive Speculation:
The SJM believes that cryptocurrencies are inherently prone to excessive speculation. They fear that widespread crypto adoption could destabilize India’s financial markets, creating unnecessary volatility and risk for investors, particularly retail investors who may not fully understand the complexities of this asset class.
-
Money Laundering and Terror Financing:
A major concern echoed by many global regulatory bodies is the potential for cryptocurrencies to be used for illicit activities. The SJM highlights the risk of cryptocurrencies becoming a tool for money laundering and financing terrorist activities due to their pseudonymous nature and decentralized structure.
-
Backdoor Capital Account Convertibility:
This is a more nuanced economic concern. The SJM fears that allowing cryptocurrencies could indirectly lead to capital account convertibility through the backdoor. This could complicate macroeconomic management and potentially destabilize the Indian Rupee, especially if large amounts of capital move in and out of the country through crypto channels, bypassing traditional financial regulations.
“Recognition may also result in money laundering and terror financing as well as capital account convertibility from the back door.”
What About Existing Crypto Investors? Sell or Face Penalties!
The SJM’s resolution doesn’t just stop at future bans; it also addresses the current crypto holders in India. The organization demands that:
- Crypto investors be given a short timeframe to sell or trade their existing cryptocurrency holdings.
- These transactions must be reported to the Internal Revenue Service (IRS) – although in the Indian context, this would likely refer to the relevant Indian tax authorities.
- Non-compliance with the ban should result in financial penalties for individuals and entities involved.
This suggests a potentially harsh approach, leaving little room for a gradual transition or alternative regulatory frameworks for cryptocurrencies.
Consumer Awareness Campaign: Shielding Indians from Crypto ‘Deceptive Ads’
Beyond the ban and penalties, the SJM also calls for a proactive consumer awareness campaign. They urge the Union Ministries of Consumer Affairs and Corporate Affairs to take the lead in aggressively educating the public about the risks associated with cryptocurrencies. The aim is to:
- Warn individuals against falling prey to what the SJM terms “deceptive ads” propagated by cryptocurrency exchanges.
- Highlight the potential financial risks and volatility associated with crypto investments.
- Discourage participation in the cryptocurrency market.
CBDC: The SJM’s Preferred Digital Currency Path
Interestingly, the SJM’s resolution isn’t entirely against digital currencies. They express support for the Central Bank Digital Currency (CBDC) being developed by the Reserve Bank of India (RBI). In fact, they advocate for:
- Accelerating the legal framework for the issuance of the RBI’s digital currency.
- Recognizing the CBDC as legal tender in India.
However, the SJM draws a firm line when it comes to private cryptocurrencies like Bitcoin and Ethereum. They explicitly state that:
“Cryptocurrencies such as bitcoin, ethereum, etc should not be as asset or digital asset… because it will indirectly become medium of exchange like currency.”
This statement reveals the SJM’s concern that recognizing private cryptocurrencies as assets could inadvertently legitimize them as mediums of exchange, undermining the government’s monetary policy and control.
Echoing the RBI’s Concerns: A Complete Ban is the Only Way?
The SJM’s resolution appears to strongly align with the stance taken by the Reserve Bank of India (RBI) on cryptocurrencies. The article mentions that the RBI’s central board of directors believes that:
- Cryptocurrencies must be completely outlawed.
- A partial ban on cryptocurrencies will not be effective in mitigating the risks.
The RBI has consistently voiced serious reservations about cryptocurrencies, citing potential negative impacts on India’s financial stability, monetary policy, and capital controls. The SJM’s resolution seems to be amplifying these concerns and pushing for a decisive and comprehensive ban.
What Does This Mean for the Future of Crypto in India?
The SJM’s resolution is undoubtedly a significant development in the ongoing crypto regulation debate in India. While the SJM’s recommendations are not legally binding, their influence on government policy cannot be ignored. The organization’s alignment with the RBI’s hardline stance and its connection to influential political circles could increase the pressure on the Indian government to take a stricter approach towards cryptocurrencies.
For Indian crypto investors and exchanges, this news is concerning. It signals a potential escalation in regulatory headwinds and raises questions about the future of the industry in the country. Will the government heed the SJM’s call for a complete ban? Or will a more balanced regulatory framework eventually emerge? The coming months will be crucial in determining the fate of cryptocurrency in India.
Related Posts – Bank DBS’s Crypto Business Grows Massively Due To Growing Demand From Investors
Disclaimer: The information provided is not trading advice, Bitcoinworld.co.in holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.
