In late February 2021, Bitcoin reached a new milestone at $61.742 USD. The cryptocurrency market literally got increased by 50% in 2021 compared to 2020. That being said, such numbers scare the several governments, especially since there are a huge amount of different cryptocurrencies in 2021.
For several months now, different countries have been talking about setting up a regulation for cryptos. These discussions are shaking the cryptocurrency. Indeed, the impact of coercive regulation would be very bad for cryptocurrencies. On Friday, January 30, 2021, India has just announced its plans to regulate cryptos.
Why would a country prohibit cryptocurrencies ?
The news shocked the world, especially the aficionados of cryptocurrencies. On Friday, January 30, 2021, the Parliament of India gave some leads on the implementation of a regulation of cryptos. The legislation under consideration would prohibit all so-called “private” cryptocurrencies in the country. In parallel, the country would set up a national electronic currency backed and managed by the central bank of India.
Nothing has filtered on the cryptocurrencies that would be affected by this ban. However, there is good reason to believe that by “private” the government means all electronic currencies other than those managed by the central bank. In this case, it would simply be like banning all cryptocurrencies in India which is huge for the market that is constantly rising, especially in this country.
A lot of journalists, heavily invested into this market. This decision will probably be a genuine thing regarding the composition of the actual parliament.
How would a country regulate cryptocurrencies “the right way” ?
A lot of countries, including, all around the world are simply scared about such currencies. The whole problem about the blockchain and these alternative types of payments are hard to understand. They also scared powerful lobbies represented by the banks.
The idea of having a currency that is 100% bypassing the state is a real issue for a lot of people. Some countries decided to operate quickly to regulate it. If we take France as an example, every person cashing out on cryptocurrencies has to pay taxes of 20% on the amount of money they just converted into “real money”.
On the other hand, this market inspired a lot of states, especially since it’s becoming a real trend, and not something people will forget about in a few days. That’s why some projects like the “E-euros or the E-Dollars” are in the labs.
For a lot of people, like Nischal Shetty, CEO of the Indian WazirX exchange the government’s objective is to make room for the arrival of their national electronic centralized currency. The stakes are high in a country that is very open-minded regarding cryptocurrencies. By taking this step aside, India would become the first country in the world to ban cryptos. It would then lose the lead in crypto compared to other countries. That’s why the regulation of these currencies are very important, the risk can be higher than the short time gains. This regulation will impact the market and we will see how it affects it after a long amount of time, that’s why authorities have to be extra careful.
Master 2 Cyberjustice, Promotion 2020-2021