Today, in an interview with Quartz India, the former Indian Economy Secretary Shaktikanta Das declared that cryptos were impossible to regulate effectively, so they should be banned. This is because of the difficulty of regulating cryptos due to the anonymous characteristics of its transactions. Das is not a new crypto hater; he was a member of the first group that studied the subject of cryptocurrencies in India, and his position about it has not changed since then.
Das was very clear in the interview and stated: “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”, effectively bringing up the fears of every government that tried to ban cryptocurrencies since its inception.
The problem with banning is that it is effectively closing operations, having authorities to do more work than in regulating. He also stated: “Currencies have the guarantee of the RBI, on behalf of the sovereign. That is the underlying guarantee for that. A share of a company—you have an underlying asset of the company. In cryptocurrencies, what is the asset base? It is created out of a vacuum, it is created out of thin air” but, as we all know, fiduciary money has no backup. So what he says applies to the same currency that all India people use.
The Ban Effect
India has not been so keen on allowing cryptocurrency business inside of its borders. Some people say that bitcoin and other cryptos are vehicles for money laundering and illegal deals. The truth is that by banning them, you only achieve users to go underground in their activities, making it even more difficult for authorities to crack down on criminals. Only by clear regulations with KYC (Know Your Customer) policies, can authorities work more closely with exchanges to detect unlawful behaviors. That is the actual trend worldwide.