If the Indian government bans cryptocurrencies, what are your options?

The Subhash Chandra Garg panel recently submitted its recommendations around cryptocurrencies to the Indian government and suggested a complete ban on Bitcoin and other cryptocurrencies. If the Indian government acts upon these recommendations, it will be a huge blow to the cryptocurrency market in the country. So, what will be the impact of such a move and what are your options in such a doomsday scenario?

Impact of a Cryptocurrency Ban

While the Indian government’s take on Bitcoin and other cryptocurrencies has been negative, it is important to understand that the recommendations of the committee are not binding on the government. They could easily choose to take a completely different approach and regulate virtual currencies. Even if the Indian government opts for a complete ban on cryptos, they will have to first bring it under a legal framework. Drafting of such regulations takes its own course and it will take quite some time to bring this under a proper regulatory framework. There might even be more petitions filed against the government, further lengthening the process.

If the Indian government bans cryptocurrencies, they would have effectively robbed Indian investors and entrepreneurs a chance of participating in a truly global revolution. Moreover, the government will also lose out on taxes and jobs that will be created in this new industry. In fact, if the government bans virtual currencies, it will accelerate the creation of a parallel economy where investors are forced to go to shady exchanges or over the counter platforms for dealings. Isn’t it better for India to regulate cryptocurrencies and truly foster the Digital India movement?

Options for Cryptocurrency Investors

If the Indian government does go ahead and take this draconian decision, it will be a good idea for Indian investors to prepare for such a doomsday scenario right away. We reckon that the investors have the following options:

1. Sell while you can – Currently, investors in India can still sell cryptocurrencies and get money through P2P exchanges. If you really need the money, it may not be a bad idea to recover some money through the P2P exchanges. However, many investors may have to stomach losses in such a scenario. The intention here is not to spread ‘FUD’ but to suggest that if you have gone in too deep in the cryptocurrency market, it maybe a good idea to get some money out. It is especially true for those who have taken loans or other liabilities to purchase cryptocurrencies. But you should be sure before cashing out. Remember that it’s your decision and yours alone if you decide to cash out on losses and the market moves towards a bull cycle. This is just a suggestion and not financial advice. Please do your own research in case you decide to sell.

2. International Exchanges – In an Indiatimes article on the same subject, the author has suggested that Indian investors can transfer them to other wallets and liquidate it in other countries. While this is an option, we highly recommend consulting a lawyer or a tax professional to understand whether such a move will be a violation of India’s Foreign Exchange Management Act or money laundering laws. Whether you can continue trading on international exchanges will depend a lot on how the law is worded, so we will have to wait for that!

3. Cryptocurrency ATMs – Many countries have cryptocurrency ATMs which allow you to withdraw fiat currencies in exchange of cryptocurrencies. However, this is again a legal grey area where it is not quite clear whether it will be accounted as money laundering or tax evasion. So, it is best to consult an expert in such a case. 

4. Spend it abroad – Many countries such as Japan and Australia now accept leading cryptocurrencies. You could easily finance a holiday with your crypto assets. This may be the simplest way to make use of your crypto investments, and enjoy a nice break 🙂

5. ‘Hodl’ it – Of course, the final option is to simply wait out and wait for your investments to go up before taking a decision. Even if the government bans it, it can also reverse it if a lot of the powerful countries globally adopt these virtual currencies. More recently, India also signed a G20 pact where these countries decided to regulate cryptocurrencies.

So, while we await a government decision on cryptocurrencies, it may be a good idea to measure the options available to you as an investor!

Disclaimer: The opinions presented in this article should not be taken as financial advice, legal advice or personal advice. Please consult your own financial and legal advisor before taking any action in the cryptocurrency market. The contents in this article are strictly the author’s personal opinion and we shall not be held liable in case of any losses to the reader from or in connection with the information obtained from this article, directly or indirectly.