Blockchain

Is regulating cryptocurrency a step further in the ‘Aatmanirbhar Bharat” mission?

The Winter session of Lok Sabha started on November 29. In this session, the government will present 26 bills. Out of them, we are all aware of a bill to repeal three new agricultural laws. And, another is The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021. 

In the past few years, the cryptocurrency market has experienced a boom. People made money overnight, and Indians invested billions of rupees into it. India is a country with an estimated more than 20 million cryptocurrency traders. Are they well educated on the operation of cryptocurrency? The blockchains? The reward and the risk ratio? No one knows. 

What is the Government’s take on cryptocurrency?

Right now, cryptocurrency is in the grey zone. Neither is it completely banned nor is it regulated. So, the government will present the bill to ban all private cryptocurrencies in India. 

On 23rd November 2021, the government said that it would allow cryptocurrency with few exceptions. Also, the government intends to create an official digital currency regulated by them. RBI, in July, also said they are working on the Central Bank Digital Currency (CBDC).

RBI deputy governor T Rabi Sankar said, “A CBDC is a legal tender issued by a central bank in a digital form. And it is the same as a fiat currency and is exchangeable one-to-one with the fiat currency.” He added, “CBDC is a digital or virtual currency. But it is not comparable to the private virtual currencies that developed over the last decade. Private virtual currencies sit at large odds to the historical concept of money.” 

Read the government’s take on the cryptocurrency bill, 2021 India.

Recently, India’s Prime Minister held a meeting with various ministers and lawmakers. The topic was to discuss the current situation of cryptocurrency. They saw many aspects from a financial stability point of view. The analysis was on how people use cryptocurrency in illegal transactions. 

Some lawmakers expressed their concerns about how various advertisements misleads investors, especially youngsters. They promise huge profits, which may lead to someone’s financial instability. 

The involvement of film stars in advertisements of trading apps has misled youths. It makes them invest a lot of money without any knowledge of cryptocurrency. They do not know how cryptocurrency functions. It must stop. 

  • How the mining of cryptocurrency has negative impacts on the environment.
  • How can it harm our living?

These are the few questions that the youth has to know before trading cryptocurrency.

Is there any result of this news?

After this news, the cryptocurrency investors experienced panic in all domestic cryptocurrency exchanges. As a result, there was a price drop in all major currencies. Bitcoin was down by 29%, Ethereum fell by 27%, and dogecoin around 20%. 

Also, the so-called meme coin, the cryptocurrency Shiba Inu coin, saw a massive fall of almost 22%. Rates at the international market were stable, though. But soon, the rates of these coins recovered as investors caught their breath after the scare of the cryptocurrency ban in India. Amid all the news, the bitcoin price today reached $ 54,900 as of data shown by Waxirx. And $54,688 as of data studied by Coinswitch.

Reserve Bank of India (RBI) banned cryptocurrencies on April 6, 2018. The ban includes banks, financial institutions, and payment gateways from serving cryptocurrencies.

The court order came as a relief for people holding cryptocurrencies in India. It also granted them the freedom to convert their crypto assets into any other currency. But, Finance Minister Arun Jaitley said that virtual currencies are not legal tender. He further stated that those indulging in such transactions are doing it at their own risk. 

The government would take action against anyone using virtual currencies for illegal activities. The RBI circular also stated that its entities wouldn’t serve virtual currencies. It includes Bitcoin, Ethereum, and others.

Government is likely to impose some laws to regulate cryptocurrency and its trading. It is planning new changes in income tax laws to get cryptocurrency gains under the radar. So, it is likely to introduce them during the Union budget next year.

Imagine the government placing a ban on cryptocurrencies in the winter session. In that case, mining, trading, investing, or holding cryptocurrency will be a crime. They can punish the law offender with fines or similar punishments.

Conclusion:

In a nutshell, 

  1. Will the whole cryptocurrency market blossom like the share market?
  1. Is it a huge bubble that is soon going to burst?
  1. How to know the right time to invest in cryptocurrency?
  1. Should investors take the exit with whatever portfolio they have?

You will find the answers to these when the government represents the bill in the Lok Sabha. 

Encrypt Team

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