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Prohibitions only delay change… India’s Blockchain Revolution is now inevitable

Making prohibitions work is like getting water to run uphill, it's against the law of nature”: so said Milton Friedman, father of modern markets and bête noir of any government busy body looking for a project to occupy them while they wait to collect their retirement cheque. And nowhere in the world are those words of Friedman being more rigorously tested at the moment than India. The Government of Prime Minister Modi may have restricted access to cryptocurrency services and even has a Bill on the slipway to ban cryptocurrencies altogether, but from corner to corner and top to bottom across the subcontinent Indians are now trading cryptocurrencies like never before. 

Paxful last month reported a sharp spike in trading on its peer to peer Bitcoin platform, with a 13% increase in numbers for the week ending 26 October: responding to the announcement from China’s President Xi Jinping that China should embrace enhanced involvement in accelerated Blockchain development. Nischal Shetty, CEO of the Wazirx crypto exchange, was certainly quick to spot the link: “India and China share a very competitive relationship. This means we’re going to see positive crypto announcements in India very soon…the China news has created a tremendous positive outlook.”

He might be right about that… and he’s not alone: over at Coindx, CEO Sumit Gupta was equally bullish: “Trader sentiment has considerably improved in India lately, mainly because of the market reversal…strong gains have attracted more traders this year”.

All of which might help to explain why, over at Government House, a team of increasingly disaffected ministers and glum civil servants are still sitting on the Bill they produced ten months ago to ban trading in all cryptocurrencies except, oddly enough, those issued with their own backing like the proposed Crypto Rupee. And parallel banking restrictions announced by the Central Bank last year are still in the process of being challenged in the Supreme Court, which is expected to resume hearing the case on 19 November after multiple delays that now border on the downright ridiculous (just how much longer will the Justices be inclined to give the State Bank of India to bow graciously to the inevitable?)

Meanwhile the markets are blithely continuing on the assumption that all indicators are pointing to a fully regularised and (more importantly) fully regulated Blockchain and Cryptocurrency platform on the subcontinent in the not to distant future, and you can’t buck the markets any more than you can make water run uphill.

Milton Friedman was right.

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Executive Overview

Like most commentators and market participants, I have been convinced for some time of Blockchain’s enormous potential to change the way we all do business in the future as well as the capacity of the technology to regularise compliance and enhance contractual certainty as we go forward. So, I’m not surprised by recent statistics on cryptocurrency trading and I certainly view last month’s comments from the Chinese President as positive encouraging.

These are not trends that can easily be bucked.

And as I businessman myself, I would certainly welcome a retreat from the Indian Government’s current policy of studied ambiguity. Over the past decade the subcontinent has made huge strides towards creating a more stable and compliant business environment, and it’s about time we saw that happening for Blockchain and Cryptocurrencies too. 

We need more certainty, not less.

Suchit Punnose

Suchit Punnose / About Author

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