India threatens ban on unofficial cryptocurrencies
After several governments have already started to embrace crypto and are looking at regulating and formally supporting some coins, India is moving in a different direction – sort of. The Reserve Bank of India, aka the central bank in charge of printing all currency in India is eyeing their own crypto coin, the digital rupee. In fact, the digital currency trial programs that the bank is planning might be available by the end of the year.
The impact of such a move can devastate entire industries, gaming included.
The problem it causes for cryptocurrencies
Now while that may well sound like India is in fact embracing crypto, that’s not the case at all. In a new bill that was issued (but not yet passed), the country is also seeking to block and forbid almost all coins currently out there. Called the Cryptocurrency and Regulation of Official Digital Currency Bill, India wants to ban just about all private coins, citing concerns of an unregulated market, money laundering and fraud as their reasons.
The government only plans to allow a select few coins in order to promote the tech behind it and explore its uses – however, which coins that will be isn’t yet known. This new bill isn’t entirely unprecedented in India – earlier this year, the country even considered criminalising the possession, issuing and mining of crypto assets. In other words, running a miner on your computer or selling that Bitcoin you’ve had since 2017 could have gotten you a jail sentence. At least in theory anyway – the rather wild idea was buried and no bill was ever introduced.
This new move is less theoretical though, as a senior government official has confirmed that the plan to ban private crypto assets will happen. It’s meant to help pave the way for the Central Bank Digital Currency or CBDC as it will be known. At the moment, there are an estimated 20 million crypto investors in India, and holdings of about $5.4 billion in crypto in the country. This figure may well be further padded by players of play-to-earn games that haven’t made any particular investments, but still hold coins.
Impact on industry as a whole
While it’s hard to foresee exactly what will happen when the bill and subsequent government coin become reality, we do know a few things already. The primary one is that, well, it’s overall an awful idea. One of the main points of appeal of crypto is its decentralized nature – taking that out utterly defeats the point, something that the Central Bank of India seems to have missed in their research into the crypto market.
Then there is the ban of other coins – its unlikely that would stop money laundering and other issues as those tend to be done by criminals, which, famously, don’t stick to the law. So, they wouldn’t stick to that law either. In the global crypto market, such a ban would be near unenforceable anyway, and would at most, succeed in banning people in India from interacting with coin exchanges and the like, something that would harm only them, with little to no benefit.
As for the cryptogaming angle – especially poorer regions of the world, such as India, Malaysia, the Phillippines and so on have a lot of dedicated play-to-earners as the amounts earned in crypto games can make the difference between feeding a family and going hungry there. Taking a potential source of income from those people is cruel at best. Games like Axie Infinity that have a scholar system where (often foreign) players manage and play with assets owned by their sponsors would hardly end, they would simply shift opportunities away from Indian players and towards others – again, a huge net loss for those who earn money through crypto in India now. Any sort of Indian crypto start-up or project would similarly be DOA, taking Indian talent out of the running for the crypto market, something that, as mentioned, benefits nobody other than non-Indian competitors.
It’s difficult to understand how and why India would pass bills to these effects, as it seems like greed is the only motivation – why else would they launch their own coin and then ban competitors? It’s hardly a new strategy, however, we know from many historic examples that that sort of enforced government monopoly doesn’t generally tend to end well, or really benefit anyone. There is a chance for India to break the mould of course, and see their CBDC flourish, but a more realistic result of this will be a hamstrung crypto market and thousands if not tens of thousands of people cut off from a source of income.
Games will also take a hit
Such a wide crypto ban will severely impact the gaming industry as well. In a time when Play-to-earn Games are gaining mass appeal, a crypto ban will permanently ban users from playing or even earning crypto assets through simply gaming. Furthermore, any ban on digital assets will impact NFTs trading, as well as block the distribution of some of the best NFT games we’ve seen released over the past year. If we stretch this even further, we might see games that are somewhat remotely related to cryptocurrencies get banned from the market. After all India is no stranger to banning EPs entirely.
We can only hope, this proposal gets buried under tons of bureaucracy and does not see the light of day, for the sake of gaming in India as a whole.