Indian government and Cryptocurrencies - “A story of the ignoramus teacher”.

Earlier today, I came to know about the news that the major banks in India including HDFC bank, AXIS bank have freezed the accounts of many cryptocurrency exchanges in India like Zebpay, Unocoin etc. These banks have reportedly asked for additional collateral with 1:1 ratio on the loans the exchanges had taken. They have also capped cash withdrawals for the few accounts which are operational as per the Economic Times. I honestly cannot comprehend why the government (yes, I don’t think the banks would undertake such an action without the consent of the authorities) is acting so reluctant when it comes to cryptocurrencies. First they called cryptocurrencies as Ponzi schemes and when asked if cryptocoins where illegal, the government had to refrain from saying anything just because they don’t have a damn clue about the cryptocurrency market. The RBI has never said that bitcoins and other Altcoins are illegal.

The authorities are pointing out many risks involved in cryptocurrency trading but aren’t many of them just vague arguments
1)Cryptocurrencies are prone to theft by hacking as they are stored digitally
A: But is there any high-value commodity or coin that is theft-proof. Is the Rupee, virtual wallets, gold, and diamonds theft-proof. Can banks assure that their internet banking facilities cannot be hacked?

2) Payments by cryptocurrencies, such as Bitcoins, take place on a peer-to-peer basis as there is no authorized central agency to regulate such payments. Hence, there is no way to settle customer problems/disputes/charge backs etc.
A: Is Bitcoin the only thing that is exchanged on a peer-to-peer basis. Gold and diamond too can be exchanged on a peer to peer basis.

3) Extreme volatility in the values.
A: Any good or commodity that is bought for the purpose of only reselling is prone to high volatile prices. Haven’t we seen the prices of precious stones go up and come down like a roller coaster? What about the real estate market which too has seen high volatility in prices.

**4) Cryptocurrencies are used for illegal activities. **
A: But are cryptocurrencies the only thing used for illegal trading? Will there be an end to illegal trading of drugs and arms if cryptocurrencies are banned? Haven’t they been here before the introduction of Bitcoin?
If filing of income tax is their concern, the tax authorities should find a way to charge the tax for bitcoins either as a coin or a commodity.

Even if all these are real problems, isn’t it just stupid to stamp down on the whole cryptocurrency business instead of dealing with the concerned problem specifically? They should stop the tendency to burn the house to smoke out the rats.

But I have a feeling that these are not the main concerns of the authorities. The problem is that the people are making quick money with trading cryptocoins. This can be related to the story of the egoistic and ignorant mathematics teacher who won’t let the students use a different method to solve a problem just because he/she isn’t familiar with it or just don’t want the student to outsmart her. We all might have come across that type of person who doesn’t like to stray off the usual lane even if it’s a good idea.

Recently it has been reported that the Indian government is considering the idea of launching its own cryptocurrency called Lakshmi. If its any truth, this shows that it's not the feature of “crypto” that’s of concern to them but the quick profit bitcoin and other Altcoins. There has also been news that JIO lead by Mukesh Ambani is launching its own cryptocurrency “Jiocoin”. How can the officials permit for such a venture if cryptocurrency business is not legal?
Lastly, I don’t think that it’s the features like the anonymity of cryptos that’s attracting the middle class Indian towards bitcoin but the possibility of earning quick profit. So what is the need of launching Lakshmi if it’s only feature is its anonymity and not the chances of earning high profit. Also coming to the original problem, why did the first of all give a permit for setting up cryptocurrency exchanges if they were going to put a hold on them later?

WHAT DO YOU THINK ABOUT THE GOVERNMENT STANCE ON CRYPTOCURRENCIES IN INDIA? EXPRESS YOUR OPINIONS IN THE COMMENTS