India’s proposal to ban cryptocurrency is a step in the wrong direction. Such a ban would be disproportionate and unjust and deny Indians the benefit of technological innovations. It would also pry into digital communications. Moreover, it would result in higher electricity costs. This article explores the implications of the proposed law.
China’s crypto mining ban will be punished with higher electricity prices
The Chinese government has banned cryptocurrency mining in Xinjiang province, which is home to the largest concentration of Bitcoin mining. A notice issued by the Changji Hui Prefecture ordered mining facilities to close and clean up the sector. Xinjiang is China’s largest centre for bitcoin mining and accounts for a third of the country’s computing power. It is followed by Qinghai, which is China’s ninth-largest bitcoin mining center.
The decision is a sign of the growing concern in China over cryptocurrency. Government authorities have said that crypto mining is illegal and contributes to the pollution of the environment. They also said that the ban would help China reach its carbon reduction goals. In addition, China’s central bank has banned other cryptocurrency-related activities, including token issuance, derivatives for virtual currencies, and cryptocurrency exchanges. The central bank has also made clear that offshore crypto exchanges are illegal in the country and cannot serve mainland China.
The ban has led to the relocation of Chinese cryptocurrency miners and traders to other countries. In response, the Chinese provinces have begun increasing the fines imposed on cryptocurrency mining activities. They are trying to save face by punishing those who do not follow their rules. However, the ban will not be rescinded anytime soon. The provinces have also set up hotlines for reporting suspected mining activities. These hotlines can be used anonymously and are a means of communication between the government and the public.
El Salvador’s support for cryptocurrency
El Salvador’s government has bought bitcoin with public funds and is launching a national cryptocurrency wallet called “chivo.” Chivo is Spanish for “cool,” and the service is designed to facilitate fast, convenient cross-border payments. El Salvador is largely a cash economy and approximately 70% of the population does not have access to traditional banking services. While many local businesses are open to accepting Bitcoin, some have expressed skepticism. The government has also launched an infrastructure of bitcoin ATMs throughout the country.
El Salvador’s support for cryptocurrency has sparked a debate about whether or not it is a good thing for the country. Proponents of cryptocurrency say it will help boost the economy. But critics say the move may lead to instability. The President of El Salvador has promised to make Bitcoin legal tender in June 2021. He also wants to reduce remittance fees, which account for about 20% of the country’s GDP.
El Salvador’s Bitcoin initiative has faced a few setbacks, including a mismatch between the decentralized ethos of Bitcoin and the authoritarian government in El Salvador. Still, President Bukele has doubled down on his initiative. His interest in Bitcoin may be less about solving the country’s economic problems than it is about boosting his own image.
Russia’s crypto mining ban
In a report, the Russian central bank announced it is working with regulators worldwide to collect information on Russian client operations for crypto exchanges. It pointed to China as a case study for tight control over virtual currency activities. In September, the government there banned all crypto transactions and mining, forcing many investors out of the market. Since then, other countries have joined the fray. Russia is the third-largest Bitcoin miner in the world, and tighter regulations could lead to a mass exodus of miners.
While the Russian government’s ban will have to be passed into law, its anti-crypto stance has already had a significant impact on the crypto market. The draft bill states that cryptocurrencies should be treated as investment tools and not legal tender. It also stipulates that all crypto-to-fiat transactions be conducted through bank accounts and that users undergo know-your-customer checks.
The proposed ban will also penalize cryptocurrency exchanges and peer-to-peer platforms. The central bank argues that these cryptocurrencies are dangerous to Russia’s financial stability. Additionally, the regulator’s proposal states that cryptocurrency mining is a significant source of non-productive electricity expenditure and threatens the country’s environmental agenda.
India’s proposed law banning cryptocurrencies
India’s proposed law banning cryptocurrencies will penalize miners and give cryptocurrency holders six months to liquidate their holdings. If they do not, they will be fined. The ban will be the first of its kind in a major economy. The Reserve Bank of India has been worried about the risks associated with cryptocurrencies.
India has issued periodic warnings regarding the dangers of cryptocurrencies, but regulators have yet to grant them official status. The government’s direct taxes department recently clarified that not paying taxes on assets will attract a penalty. The Central Board of Indirect Taxes and Customs is currently deliberating on whether to ban cryptocurrency trading in India.
The government has yet to announce the law, but it has hinted at a ban on mining. It has also banned trading and holding cryptocurrencies. If the government implements this ban, it will be the first major nation to criminalize the possession and trading of cryptocurrencies. China, for example, has banned mining but not the possession of cryptocurrencies. This ban could also shut down India’s high-tech industry. India’s IT services industry is one of the largest in the world.