Cryptocurrency ban in India Latest News
Money is shifting as a result of a significant push toward private cash in the form of cryptocurrencies. In the normal world, sovereign governments rule nation-states and issue their own currencies for economic purposes. Cryptocurrency disrupts this established world of commerce and economics, compelling various countries to consider how to regulate the growing realm of a possible alternative economy. Cryptocurrency ban in India Latest News
India’s government is one such nation that is introducing legislation to regulate cryptocurrencies, which has remained uncontrolled in the country despite increased investment in this type of cash.
FIRST AND FOREMOST, WHAT IS CRYPTOCURRENCY?
In essence, a cryptocurrency is a digital money. It is based on a technology known as block-chain. Bitcoin and Ethereum are two prominent cryptocurrencies. Their values have since plummeted after the government’s announcement of a law to regulate cryptocurrencies in India.
Cryptocurrency is protected by cryptography, a sophisticated kind of software coding. Cryptocurrency’s blockchain technology may be thought of as a distributed ledger that is maintained on a network of computers. Cryptocurrency transactions are recorded on their individual blockchain ledgers. Cryptocurrency ban in India Latest News
This is a whole new realm of money, vastly different from the currencies familiar to the globe’s commoners, who are still used to digital transactions using sovereign currencies. These digital transactions imply the flow of money without the need for real currency transfers, as was customary in the pre-digital period.
HOWEVER, WHY IS THIS A PROBLEM?
Any transaction involving a sovereign currency requires the involvement of a government middleman. The bank serves as this middleman. In the case of bitcoin, no middleman is required. Directly between two entities, the transaction may be accomplished.
This has the potential to liberate the economy from the government’s control and deprive it of revenues, creating an amazing quantity of black money, or money that is neither taxed or identified. If allowed unchecked, this might eventually jeopardise the very existence or need of a government. Cryptocurrency ban in India Latest News
Cryptocurrencies are a collection of decentralized digital currencies that are not regulated by any central bank. Though no official statistics is available, it is believed that cryptocurrencies in India now contain over Rs 40,000 crore or approximately $5.40 billion, with approximately 1.5-2 crore crypto investors. According to Reuters, its worth is estimated to be $10 billion, far beyond the government’s control. This seems to be the issue.
Cryptocurrency ban in India Latest News
WHAT IS THE GOVERNMENT CURRENTLY DOING?
The Narendra Modi administration intends to draught legislation during the forthcoming Winter Session of Parliament to criminalise all private cryptocurrencies and pave the path for the introduction of an official digital currency. To put it simply, the Reserve Bank of India (RBI) will launch an Indian sovereign cryptocurrency. Cryptocurrency ban in India Latest News
The Cryptocurrency and Official Digital Currency Regulation Bill, 2021, would “provide a conducive environment for the formation of the official digital currency.”
There is worry that increased use of cryptocurrencies, if left unregulated, might serve as the primary source of financing for terrorist organizations and hawala transactions. Recent events in the Afghanistan-Pakistan area have heightened that anxiety. This may be another reason for the government to pass cryptocurrency regulation.
Cryptocurrency is not inherently harmful to the economy since it enables the use of current technology to protect cash usage and transactions. However, the RBI has continuously resisted digital currencies, seeing them as a danger to the nation’s sovereign banking and currency systems. Cryptocurrency ban in India Latest News
The RBI was concerned that cryptocurrency may be used for money laundering purposes. However, similar ideas were articulated at the time in reference to private coins. Fundamentally, cryptocurrencies are supposed to be anonymous. However, this obstacle may be overcome if the central regulator issues its own coin.
The circulation of cryptocurrencies has resulted in the emergence of a new class of stakeholders who express themselves through cryptocurrency exchanges. They advocate an outright prohibition on cryptocurrency. Indeed, in March 2020, they filed a petition with the Supreme Court challenging the RBI’s prohibition on cryptocurrency trading, which resulted in the restriction being removed.
SO, WHAT DO WE DO NOW?
In certain ways, the government’s law acknowledges the economic realities of cryptocurrencies. China has already taken this step by introducing a digital yuan and prohibiting the usage of private cryptocurrencies inside the nation. By putting cryptocurrencies under the RBI’s oversight and control, the government hopes to avert the formation of an anonymous parallel economy of illegal money. Cryptocurrency ban in India Latest News
The federal government has suggested to introduce a Bill on cryptocurrencies during the forthcoming Winter Session of Parliament in order to promote the formation of the Reserve Bank of India’s official digital currency (RBI).
The Bill, named “The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021,” will be introduced into Parliament and passed.
According to a Parliament bulletin, “the Bill’s declared purpose is to provide a framework for the formation of the Reserve Bank of India’s official digital currency.”
Additionally, the Bill attempts to restrict the use of private cryptocurrencies in India. However, it provides for specific exclusions in order to promote cryptocurrency’s underlying technology and applications. Cryptocurrency ban in India Latest News
Top government officials have indicated that India may not entirely reject the idea and technology of digital currencies and may not adopt a confrontational stance like China.
The government opposed treating cryptocurrencies as money, owing to the fact that currency notes and coins are backed by legislation and controlled by the RBI in cooperation with the government.
“The sovereign backs the currency. It is a subject that may be governed at any level. If cryptos are granted monetary status, the issue of who would give the guarantee remains “According to an official.
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