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Opinion
Shruti Rajagopalan

India Bitcoin Ban Would Be a Terrible Idea

The country’s previous attempts at currency controls impoverished Indians and prevented its companies from competing globally. This one won’t work any better.  

The new law could ban mining, owning, trading or transferring cryptocurrencies. 

The new law could ban mining, owning, trading or transferring cryptocurrencies. 

Photographer: Akos Stiller/Bloomberg

If India proceeds with a rumored ban on cryptocurrency, it wouldn’t be the country’s first attempt to impose currency controls. This time, however, a ban is even less likely to succeed — and the consequences for India’s economy could be more dire. The country shouldn’t make the same mistake twice.  

In the 1970s and 80s, at the height of what was known as the License Raj, Indians could only hold foreign currency for a specific purpose and with a permit from the central bank. If a businessman bought foreign exchange to spend over two days in Paris and one in Frankfurt, and instead spent two days in Germany, the Reserve Bank of India would demand to know why he’d deviated from the currency permit. Violators were routinely threatened with fines and jail time of up to seven years.