India is continuing its battle against cryptocurrencies. Nevertheless, after a supposed draft bill to ban cryptocurrency in India and up to ten years in jail for mining, holding, or using crypto, the government is not seeing the expected results. In fact, bitcoin is trading at a $500 premium on the largest local exchange, showing an increase in demand for the digital asset.
Indian exchanges have been unable to operate with local currency and banks are blocking all operations to purchase digital assets. Even exchange sites like LocalBitcoins that allow peer-to-peer trades have been blocked and media propaganda against cryptocurrencies is spreading.
Nevertheless, cryptocurrencies are still not illegal in India and the country’s interest in crypto has been increasing over the last few months.
In fact, the government’s maneuvers are having an opposite effect to their desired one; presently Bitcoin is trading at a $ 500 premium on bitbns, one of India’s largest exchanges. According to bitbns data on CoinMarketCap, June 23, one bitcoin is selling at $ 10,759.05 for the pair BTC/USDT while for the pair BTC/INR is selling at $ 11,298.25.
The government is not only preventing the purchase and sale of crypto assets, but it is also making access to online information difficult. Websites such as Reddit and Telegram have been blocked for intermittent periods by internet service providers, demonstrating the strength and control that the Indian government can, and is willing to impose. Even accessing a PayPal account is starting to become a challenge too according to a report detailing that Citibank India has blocked PayPal payments.
This situation derives mainly from the economic problems that have developed in India. The value of INR is slowly deteriorating with the dollar and other major national currencies.
The state has therefore raised interest rates to prevent this fall in value. The truth is that these higher interest rates reveal that the state will not be able to pay its debts as well as increase the “real” supply of money thus lowering the value of fiat money. To stimulate economic recovery, India should increase the number of exports, thus increasing demand for its national currency.
Generally, the value of fiat money tends to depend more on the level of government debt and the likelihood of it being repaid in addition to just how much demand there is for your money.
On the contrary, India could exploit its position of being an inexpensive nation in order to develop technological hubs, attracting investors and startups who are willing to work in the Blockchain sector.
By applying capital control and financial oppression, the government is pushing people to use bitcoins as a convenient means of not seeing their savings deteriorated by inflation.