[instagraham]

It's not as easy to participate in the informal economy as it used to be. Everything from one's bank to one's mobile number and govt id are linked. If you want to deposit funds in an exchange, you'll need some form of KYC--barring which your bank debit/credit card is linked anyway.

The banks, even before the ban (which has yet to come), were keeping track of customers making payments to exchanges. In some cases, they customers a letter, erroneously citing an central bank order banning cryptocurrencies that had later been struck down by the Supreme Court. Despite no regulation, they've been denying services to exchange, preventing their cards or UPI payment addresses being used to transact either. Most mobile wallets followed suit.

The only option that remained then was P2P. I should caveat that I'm not sure I fully understand how that works in this case, though.

The issue is there's no real anonymous way to pay someone besides cash, unless you already had a crypto account with a wallet that had been filled. So an informal economy will need a safe way of turning physical cash into crypto and vice versa, in a regulatory environment where it may be banned to transact cryptocurrencies.

Crypto adoption is a gradual curve where people will only slowly start putting their savings or investment funds into a crypto account.

[NaturalPhallacy]

Banks and payment processors have been our de facto shadow government for years now.

They cut off Wikileaks, the pirate bay, various kink/porn sites, and any entity they don't like really. Usually all it takes is a warning from them to completely shutdown an entity, or worse, force them to obey. Coinbase voluntarily doesn't deal in Monero for this reason for example.

[toomuchtodo]

Would turning cash into crypto outside of the banking system not be considered money laundering?

[instagraham]

Depends on what they classify it as. The preview of the bill said "private coins" would be prohibited. On what grounds, they did not say.

There was a call to treat NFTs as securities. If something like that is done, then any illicit trade of securities would be considered illegal, if not money laundering.

[ashwagary]

Only money acquired through illegal means can be considered laundered.

[PeterisP]

If transacting in certain cryptocurrencies is prohibited, then any money traded for these cryptocurrencies is quite literally acquired through illegal means.

[ashwagary]

If the money was earned from legal activity, I don't think a conversion to crypto is technically money laundering either.

Perhaps the profit from holding cryptocurrencies could be considered laundered once converted back to INR since the profit itself was illegally earned.