The Indian government is reportedly considering the blocking of internet protocol (IP) addresses of cryptocurrency exchanges in a bid to prevent digital currency trading in the country. It is still not clear if the IP addresses considered for blocking are only for domestic crypto exchanges or for foreign ones too.
Reports of IP address blocking have come at a time when the Indian government is set to introduce the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 in the Parliament very soon.
Reportedly, the bill intends to create a facilitative framework for an official digital currency issued by the Reserve Bank of India (RBI) while prohibiting the use of all private cryptocurrencies in the country.
Should the ban implement, virtual private networks (VPNs) and other means can still be used to trade digital currencies, as per an industry insider:
“Various routes like VPNs, peer-to-peer trading, using cash to buy/sell cryptocurrencies and using wallets outside India to store and transfer cryptos, using part of the money permitted to send abroad for investment within the liberalized remittance scheme limit of $250,000 can be diverted for buying cryptocurrencies remain loopholes.”
Earlier two months ago, news surfaced that the Indian government intended to put a ban on all cryptocurrencies and introduce its own central bank digital currency.
However, the country’s Finance Minister Nirmala Sitharaman recently hinted that there might not be a blanket ban on crypto operations. She made it clear that there will not be a complete ban on cryptocurrencies or at least the technology part of it, saying:
"From our side, we are very clear that we are not shutting all options. We will allow certain windows for people to do experiments on blockchain, bitcoins, or cryptocurrency."
However, just last week, reports again surfaced that the Indian government is likely to propose a ban on cryptocurrency trading in India.
If the proposed ban comes into effect, India would be the first major country to make cryptocurrency holding illegal as the bill criminalizes the possession, issuance, mining, trading, and transferring of the same.