Crypto ban law is doing rounds of the internet. The news of goverment banning all private crypto came as a shocker to the crypto industry. A few days after the Governor of Reserve Bank of India Shaktikanta Das expressed his opinion that strongly opposed the flourishing cryptocurrency on the land of India, the Union Government has come up with a Bill to regulate cryptocurrency and ostensibly ban all private cryptocurrencies that will be discussed in the winter session of Parliament starting on 29 November.
Central Government’s crypto ban law bill does not elaborate which crypto coins it considers private and which not. The Bill titled ‘The cryptocurrency and regulation of official digital currency bill 2021’ is among the 23 other bills to put before assembly for introduction, consideration and passing.
The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, which is yet to be officially approved by the Cabinet, seeks to craft a crypto ban law in the country with a few exceptions has given rise to many speculations. Some crypto experts say the government would only ban crypto coins that do not offer transparency in their trading.
What Are Private Cryptocurrency Coins?
One of the key features of digital currencies is that they offer complete protection in terms of concealing a person’s real name, identity, and transactions carried out on the blockchain network.
With the exponential surge in cryptocurrency investors, blockchain developers saw a prospect into launching more secure and privacy-oriented digital coins that do not disclose a person’s identity in any circumstances.
Such private crypto coins provide an added layer of security than coins like Bitcoin that uses blockchain technology.
Below is a list of some of the most popular private coins, each of which has many privacy protections built-in and may even keep users’ names and actions hidden.
1. Dash coin
Dash is a cryptocurrency that provides its users with the ability to remain anonymous. Dash coin’s PrivateSend feature, which enables traders to select whether or not their transactions are private, gives them the option to choose between keeping their transactions private or public. The one-of-a-kind function enables users to remain safe when using coins that violate some nations’ legal requirements. Each transaction using the private transmit function is subject to a fee charged by the service provider.
2. Zcash (ZEC)
Zcash boasts that it is a more advanced cryptocurrency than the market leader, Bitcoin itself, in terms of security. Zcash asserts it is the safest type of digital money globally, citing the increased security and privacy measures that it has implemented. ZEC is deservedly regarded as one of the most significant private cryptocurrencies in the world, thanks to the use of a cryptographic technology known as Zero-Knowledge Proof and the provision of an option for investors to mask activities. Using Zero-Knowledge Proof, the size of the transaction and the location of the traders may be obfuscated.
3. Monero (XMR)
Monero is a prominent cryptocurrency that is most approved for its ability to assist users in keeping their real identity behind the curtains. Monero transactions are way more challenging to track down when compared to various other tokens since they incorporate ring signatures and stealth addresses, making them challenging to trace. These techniques keep the identity of the users hidden, allowing them to execute any activity in a safe environment.
Beam emphasizes security, with fundamental features that include total control over the user’s personal information. Default privacy settings on Beam ensure that all transactions are kept secret. The blockchain technology that Beam uses does not keep a record of any private information such as an address or other personal information.
5. Verge (XVG)
Verge protects the identity of its buyers and traders. Although Verge does not leverage cryptographic methods to secure investors’ identities, it uses existing and well-tested technologies such as The Onion Router (TOR) and the Invisible Internet Project (I2P). Verge had previously gained attention when a primary pornographic website began taking payments in the Verge tokens.
Apart from the above mentioned digital coins, several other crypto coins offer extra privacy and anonymity while transacting into those coins, making it difficult for legal authorities to trace down specific transactions. Grin, Firo, Delta, Horizen, Super Zero Protocol, BTCX India, ByteCoin and UCoin are a few other private digital tokens that promise to hide their investors’ real identity and transaction logs.
The news of crypto ban law expressing the possibility of a Crypto ban in India ensued an enormous crash in the values of the digital coins. As soon as the news broke out, crypto investors showed panic and tried to exit the crypto market, bearing a loss of more than 50 – 60 per cent of their portfolio value.
Crypto investors also complained about differences in crypto coin values over different trading platforms. While the India-based crypto trading platform WazirX experienced a slight delay in its functioning given to the heavy traffic it received after people learned about the Bill seeking a ban on cryptocurrency in India.
Crypto investors joined the sellout spree immediately to stop the loss after they learnt about the crypto ban law. According to its market cap value, Bitcoin, the largest crypto coin, plummeted to as low as Rs 38 lakh in response to the Bill news. Other cheap coins such as Dogecoin, Shiba Inu, Wink, Dent, Holo, and eCash saw a significant down surge yesterday. Novice crypto investors, who have just begun investing, prefer buying such low valued coins over Bitcoin, Ethereum and Binance Coin. These novice investors are the ones most clueless about what to do next if the crypto ban law is accepted in the assembly.
Amid the crypto ban law chaos, many were confused about the concept of private coins and public coins as the Bill highlights that it seeks to ban all private cryptocurrencies.
Here is a difference between private coins and public coins.
Private coins offer an extra level of security and privacy by hiding the buyer’s real identity, location, and transaction records. On the other hand, public coins are the ones that offer transparency in their transactions and investors can be traced on the blockchain.
Pertaining to public coins’ transparency, organizations that deal with sensitive information, such as commercial contracts or people’s personal information, prefer to transact in a private blockchain network. As mentioned above, Monero, Dash, Zcash, Verge and Beam are a few examples of private coins.
Another question that haunted crypto investors is whether top currencies like Bitcoin, Shiba Inu, DogeCoin, and Ether are private or public coins?
The well-known cryptocurrencies, such as Bitcoin, Dogecoin, Ethereum, and Shiba Inu, are public since their transactions are transparent. All transactions on the blockchain can be read by anybody who has access to the blockchain. Nonetheless, these coins, too, offer a certain level of masking to its investors transacting on the blockchain.
The Crypto ban law bill also proposes a facilitative framework for developing the Reserve Bank of India authorized and acknowledged digital coin. If the proposal gets a consensus in the assembly, India will be the second country after China launched its central bank-backed digital coin. China introduced its digital coin called Digital Yuan after it imposed crypto ban law in the country. The Central Bank of Uruguay, Sweden’s Riksbank, and The Bank of England are also grappling with the possibilities of developing their self-acknowledged digital currencies, and the process is in the pipeline.
The Reserve Bank of India has also urged to form a crypto ban law for India. The central bank, in 2018, had also enforced a strict ban on crypto transactions that prohibited the indulgence of banks, companies or individuals into crypto trading.
What is the reason behind the Reserve Bank of India’s Demand For Crypto Ban Law?
The Reserve Bank of India has had a staunchly anti-cryptocurrency position from the beginning of the cryptocurrency boom in the country and reiterating the need for crypto ban law. Cryptocurrencies run on the blockchain, which is a peer-to-peer computer network that is distributed around the globe. Because cryptocurrencies are entirely virtual, the Reserve Bank of India will be unable to put them under its jurisdiction, which means there would be no entity responsible for monitoring cryptocurrency transactions. This gap provides real chances for illegal acts such as money laundering, tax evasion and terror activities to be funded and supported.
Constant demands in India for more regulations on virtual currency transactions were raised, saying that an unregulated environment might cause more domestic assets to be channelled into the asset class, putting family savings in danger.
The Reserve Bank of India remains wary about cryptocurrencies, notwithstanding recent developments. Despite this, rumours indicated that the reserve bank might be working on developing its digital currency. If this is the case, the new product from the bank may be able to satiate the growing interest in virtual currencies among the general public.
The Reserve Bank of India may have seen cryptocurrencies as a severe danger that lacked a viable quick countermeasure. As a result, the Reserve Bank of India decided to prohibit cryptocurrency trading within the country’s borders in 2018 by crafting a crypto ban law. The Supreme Court of India, on the other hand, restored the limits placed on cryptocurrencies in March 2020.
The Supreme Court Bench’s Opinion Stated During Making A Verdict In March 2020, When The Crypto Ban Law Was Lifted.
According to a 180-page judgement by an apex court bench comprising justices Rohinton Nariman, Aniruddha Bose, and V Ramasubramanian, “the Reserve Bank of India has not taken a position that any of the entities regulated by it, that is, nationalized banks/scheduled commercial banks/cooperative banks/NBFCs, have suffered any loss or adverse effect directly or indirectly, as a result of virtual currency exchanges.”
According to Justice Ramasubramanian, who wrote the verdict, the RBI circular was “disproportionate” in light of the central bank’s previously consistent stance that such currencies were not illegal in the nation, according to the ruling.
Furthermore, the court concluded that the Reserve Bank of India did not take into account the availability of alternatives before releasing the circular for crypto ban law.
Since the Supreme Court of India reinstated the crypto ban, India’s digital currency eco-system was rapidly thriving. Investing in cryptos became a kind of trend for the young Indian public. Within a period of one and a half years, India became one of the biggest countries having billions of dollars in cryptocurrency investments.
The clouds of ban again started huddling around crypto as a repercussion of the crypto ban law on trading and mining levied in China. However, the central government chose not to remark on legalization or to ban crypto trading in India.
During an interview with the leading news portal, finance minister Nirmala Sitharaman was asked to clarify her stance on crypto ban law in India. The finance minister said that a great dialogue had taken place on the topic of cryptocurrencies in India. The opinions of the Reserve Bank of India (RBI) have also been taken into consideration.
“In these days and modern age, it is not acceptable to declare, “I don’t care about what’s going on,” or “We don’t want to do anything.” At the same time, are we ready to follow in the footsteps of El Salvador? We have to be certain that a futuristic item cannot be blocked out, for example,” Nirmala Sitharaman added to her statement.
The statement from finance minister Nirmala Sitharaman made people believe that she had a positive approach to looking towards crypto trading within India. But the recent alarming statements of the Reserve Bank of India Governor Shaktikanta Das that provoked the central government to draft a crypto ban law turned the table around.
Shaktikanta Das, in his statements, had expressed deep concerns about the financial stability, and he also sensed a threat to India’s macroeconomics.
‘In terms of macroeconomic and financial stability, digital currencies are a major cause of worry for the Reserve Bank of India. The government is actively considering the matter, and a decision will be made on it. We have major concerns about it as the central bank, and we have raised it several times,’ Das said at a recent event in Washington.
‘There are two contrasting opinion streams about crypto ban law inside the government: one that wants to abolish cryptos and another that wants to regulate them.’ However, since the regulatory environment remained unclear, the first group is emerging as the victor,” according to a policy expert who is acquainted with the issue.
WazirX CEO Nischal Shetty’s reaction on Crypto ban law
“The crypto regulatory bill has been scheduled for the winter session,” said Nischal Shetty, the CEO of WazirX, India’s biggest cryptocurrency trading platform, in a tweet. The description has remained mostly unchanged. On both sides, there will be a lot of conjecture. “The good news is that more individuals inside the government are becoming aware of how cryptocurrency works.”