Relations between the Indian government and cryptocurrencies continue to be complicated. After last year's prohibition prohibiting exchanges from having a registered office in the country, the largest companies in the sector migrated abroad but continued to operate in the subcontinent. From that moment a long period of negotiations began, with the Reserve Bank of India (RBI) which does not seem at all willing to give up.
According to the government position, cryptocurrencies would be a threat to investors. They would not offer adequate guarantees and adequate information supports, as they have no intrinsic value that can justify their nature as a financial instrument. Many Indian realities and not only have however put great pressure on the legislators, asking that the nation not be excluded from the new form of finance that seems destined to become more and more popular in the future.
The confrontation between startups and exponents of the central bank has now gone on for over a year and a verdict seems to emerge clearly: it is now only a matter of days, at most weeks, before the ban on negotiating cryptocurrencies is extended to every company and each private. At least all the signals we have recorded in recent weeks seem to point precisely in this direction.
Effects contrary to expected
The fact that many Indians are convinced of the goodness of cryptocurrency investments does not seem to have changed with the doubts expressed by the RBI. For this reason, growing tensions, which have now become an expectation due to the official decree, have led investors to take the opposite direction to what would have seemed natural. In fact, all the major exchanges that have their core business in India are recording unprecedented levels of transactions these days. Just look at the data reported by CoinMarketCap to realize it.
The explanation is very simple: if for now it is still legal to invest in cryptocurrencies, the better to take advantage of them. Those interested are making sure to grab what could be the last tokens available on regulated exchanges. There will certainly continue to be a black market made up of computer scientists expert in anonymity, but for the mass market in India it is a real race for the crypto.
Although the constant focus on Facebook's cryptocurrency has certainly played a very important role, it seems clear that Indian investors are the main driver of the crypto market these days. We are talking about the second most populous nation in the world, which in the last ten years has faced a very important digitalization path - especially in the cities - and which now has a middle class in a position to be able to invest money.
Investors are convinced that the ban to cryptocurrencies will probably be withdrawn in the future, or they are aware of the fact that it is enough to emigrate with a computer and then resell their assets in any other country at a later time. Surely it could be the end of mass crypto trading in India, but for long term investors they are the most important days.
Does baning cryptocurrencies really help?
This question arises, since something very similar had already happened in Mexico before the government issued a similar sentence. Surely the Reserve Bank of India has no interest in harming its citizens, so it is unlikely that there will be strong economic interests behind this decision. The official status has not yet arrived, so it is always possible that the situation will change, but for the moment it seems that we are moving in this direction to protect investors.
The fact is that a citizen who can travel will always have, in some way, the possibility of trading cryptocurrencies or investing in them. It is enough to go to any neighboring country with India to have access again to the faculty to freely negotiate any crypto, so it is not clear how effective a total ban of these assets can be.
At the same time it is a choice that shows how, even today, governments around the world are split on this issue; the United States is increasingly taking steps towards marriage with the decentralized economy, India is taking steps back. I wonder if one day we will be able to have a harmonized international regulation.