Centre govt mulling blocking cryptocurrency exchanges’ IP address: Report
Centre mulls to block cryptocurrency exchanges’ IP address. (File photo)  |  Photo Credit: BCCL
New Delhi: The Centre is reportedly planning to block internet protocol (IP) addresses of companies/exchanges on which trading in cryptocurrencies is done in an earnest attempt to check a probable economic disaster if an alternative monetary system emerges in the country which is beyond the central bank’s control.
Last month, the government had said it would bring a bill—one of the world’s strictest policies against cryptocurrencies—to deal with digital currencies as regulatory bodies Reserve Bank of India (RBI) and Securities and Exchange Board of India (Sebi) do not have the legal framework to deal with them. Several media reports surfaced that the banking regulator has been working on launching its own digital currency.
RBI Governor Shaktikanta Das last week cleared the air on Bitcoin—the world’s biggest cryptocurrency—saying that the use of “blockchain technology has several positive aspects that need to be exploited”. However, cryptocurrencies such as Bitcoins that are traded, the RBI has flagged many concerns.
It has been reported that the proposed bill would give investors in cryptocurrencies up to six months to liquidate following which penalties will be levied. Many industry insiders are of the view that a total ban on private cryptocurrencies in India is likely to push large investors to take their business underground.
Last year, the government had blocked several Chinese application, including TikTok and Weibo in order to protect the data and privacy of the people of India. It had blocked adult sites, too.
Citing unnamed industry professionals, Business Standard reported that the Centre may “succeed in blocking known sources of platforms permitting trading and investment of cryptocurrencies. Still the measure taken will not be foolproof in successfully executing the ban”.Virtual private networks (VPNs) provide privacy to cryptocurrency traders. Also, there are platforms promoting illicit online gambling and so far no action has been effective against them.
The business daily quoted an industry expert as saying that several ways such as VPNs, using wallets abroad to store and transfer cryptos, using part of the money allowed to send overseas for investment under the Liberalised Remittance Scheme (LRS) which allows an individual can transfer up to $2,50,000 abroad in a year can be re-routed for buying cryptocurrencies are the main grey areas of banning virtual currencies.
Exchanges dealing with crypto assets had approached the government and sought clear regulations for regulating and taxing digital currency, mentioning that the government should bring them under the highest tax brackets, and not impose a blanket ban. Virtual currency exchanges had suggested that investors’ returns can be taxed at 35 per cent and cryptocurrency exchanges can pay 28 per cent goods and services tax (GST).
Despite the government actively contemplating a ban, transaction volumes have soared and 8 crore investors in India now hold Rs 10,000 crore ($1.4 billion) in crypto-investments, Reuters earlier this month reported, citing industry estimates. However, no official data is available.