The world of cryptocurrency has created legal and social problems across the globe. Whether it be exchanges shutting down without notice, multi-billion dollar hijackings, or defining a legal framework for what cryptocurrencies are, governments have had trouble wrapping their heads around the idea. While most countries have begun to look into regulating these currencies as investments, similar to stocks or bonds, one government is taking a different approach.
Rather than trying to regulate the industry, India is considering making the whole industry illegal. A bill making it illegal to mine, hold, buy, sell, or trade cryptocurrencies is reportedly on its way to the Parliament of India. The punishment would be a decade-long jail sentence for any and all of these "infractions."
The bill, entitled "Banning of Cryptocurrency and Regulation of Official Digital Currency Bill 2019," has been created to combat what the government sees as a technology that enables illegal money transfers, illicit purchases, and tax evasion. There is definitely a lot of reality behind the accusations. Silk Road famously made it easy to buy and sell drugs, weapons, and even people, all made possible because of Bitcoin. Bitcoin, and other cryptocurrencies, also make interstate money transfers easy, potentially circumventing existing bank laws.
However, trying to outlaw the concept is never going to work. The technology is here and it isn't going anywhere, no matter how hard the government tries. In trying to outlaw cryptocurrency, it will not eliminate its use. Instead, it will drive it underground, where the behaviors will continue to exist without any way for oversight. Instead, the government should figure out how to make cryptocurrency legitimate within the context of the country's banking law. Unfortunately, the government had previously sided with the central bank, who has fought hard to make cryptocurrency a bad word, likely leading to this law.