Balaji Srinivasan, a former Coinbase chief of staff, believes the imminent ban of cryptocurrencies in India will be akin to an internet blocking and could cost the country trillions in potential profits.
Speaking in an interview with The CapTable, Srinivasan said a blanket ban on Bitcoin (BTC) and other cryptocurrencies would simply redirect trade revenues to nearby Asian markets, which amounts to a “trillion dollars” error for India:
“It is really important that the ban (India’s plan to ban owning, trading, mining or investing in cryptocurrencies) not be implemented. It would be a trillion dollar mistake for India, without exaggeration.
On February 11, a senior official at the anonymous finance ministry told Bloomberg that the upcoming ban is very likely to happen, revealing that cryptocurrency holders will have 3 to 6 months to turn their money back into legal tender.
The Cryptocurrency Act and the Official Digital Currency Regulation Act was introduced in late January, and it also lays the groundwork for an official digital currency to be issued and supervised by the Reserve Bank of India.
Now, Srinivasan, an angel investor and entrepreneur, has suggested that India could become 20% poorer than it will be over the next five years, if the embargo continues. Andreessen Horowitz, former general partner, said blocking cryptocurrencies would effectively stop the “financial internet” from taking hold in India:
India could be 20% poorer than it would have achieved over a five-year period. It’s almost like blocking the internet for 5 years. The losses add up […] It will be a reflection of economic liberalization in many ways. It would basically be a ban on the financial internet from entering the country. It will not achieve the desired goal. “
Although the ban targets all cryptocurrency holders, its impact on individuals may be less than its impact on traders and companies. By using cold storage wallets, and by retaining control of their private keys, Indian citizens at ground level can still avoid any anti-crypto legislation, but they will naturally encounter difficulties when trying to cash out.