Cryptocurrency regulation will be more effective than a prohibition

<p>The government appears to be eager to ban private cryptocurrencies, although such a prohibition is unlikely to be effective. Perhaps our best option will be to assist a digital rupee in establishing a foothold in a competitive market.</p> <p>India's government has a complicated relationship with currency, as seen by its mistaken attempt five years ago to stamp out ill-gotten wealth and illicit behaviour through a note ban. Now, as the threat of a ban on private cryptocurrencies grows, may we be in for another upheaval that falls short of its intended outcome? It listed the Cryptocurrency and Regulation of Official Digital Currency Bill for enactment during this winter session of Parliament on Tuesday.</p> <p>As stated, it will "prohibit all private cryptocurrencies" but will allow exceptions "to advance the underlying technology." Additionally, it will offer a framework for the RBI to develop a digital currency. While its ultimate shape may elicit relief from India's cryptosphere, which has a lot at stake, it appears for the time being that the Centre is prepared to crack down hard on blockchain-based coins.</p> <p>While trading platforms and similar entities face a grim future, the same is not true for cryptos. As the name implies, they can continue to thrive in the absence of enforcement.</p> <p>Money is fungible, and their global popularity has conferred fungibility on crypto assets. As previously said, it was demonetisation that brought Bitcoin into social discourse, with stories of modest fortunes being locked away for exclusive access via secret codes.</p> <p>While purchases made on open platforms can be tracked, the internet's global reach allows owners to use or encash their chips in privacy. Due to the fact that tokens issued outside our jurisdiction cannot be deleted, prohibiting them is likely to harm legitimate cryptocurrency firms but will ultimately prove useless.</p> <p>Worse, if they quit our formal economy, we may well be unaware of their influence on numerous economic policy inputs. Reg