Another of the infamous price swings that cryptocurrencies are known for was underway amid news that the Center will table a bill in parliament that would ban these unregulated assets in India, which is one of the largest crypto-property bases. in the world wants to tackle. . The center has long made it clear that it is wary of cryptocurrencies, even as the RBI has announced plans to launch its own digital currency. Here’s what you need to know about the crypto scene in India.
How many people own cryptocurrency in India?
According to industry sources, more than 10 crore Indians, mostly younger people, but also seniors are said to have invested in cryptocurrencies. The country is said to have about 10.07 crore cryptocurrency owners, giving it a big lead over the US, although it is estimated to outpace India in total asset value.
Crypto research firm CREBACO says total investments in cryptocurrencies have risen to more than $10 billion by the end of 2021, from just under $1 billion in April 2020.
When the news that the crypto bill was in the works for legislation came out, significant drops were reported in the value of major cryptocurrencies such as Bitcoin, Ether, etc. Although the development was not specifically linked to its proposed filing during the next winter session of Parliament .
What are the concerns about cryptocurrency?
At a virtual meeting of the Sydney Dialogue – a forum focused on emerging, critical and cyber technologies – in mid-November, Prime Minister Narendra Modi had said that all democratic countries must work together to ensure that “it doesn’t end up in the wrong hands, which our youth could spoil”.
Previously, the Prime Minister had chaired a meeting that addressed the issue of cryptocurrencies, noting that unregulated crypto markets can be used for money laundering and terrorist financing, while also raising concerns about misleading claims about huge returns on cryptocurrency investments.
Sources had said the practice of courting investors, especially young people, with advertisements that promised too much profit and also hid risks, was flagged during the meeting.
What is the official position on cryptocurrencies in India?
Reports suggest that the cryptocurrency bill missed its rollout in Parliament during this year’s budget and monsoon sessions, even when Union finance minister Nirmala Sitharaman said in July that the wait was just to see “when it is released.” cabinet can take it up and consider it so that then we can move it”.
The wording of the bill as stated in the Legislative Affairs for the winter session has remained the same and says it aims to create a facilitating framework for… the official digital currency to be issued by the Reserve Bank of India” and that it also aims aims to “ban all private cryptocurrencies in India”, but the bill allows “with certain exceptions to promote the underlying technology of cryptocurrency and its use”.
Reuters news agency quoted an unnamed government source during the budget session to say that the bill would “be one of the world’s strictest policies against cryptocurrencies (and) criminalize the possession, issuance, mining, trading and transfer of crypto assets.” would say”. said that in such a case, investors would be given a window to sell their crypto holdings, after which sanctions would be introduced.
But the same story noted that investors had read encouragement in the Treasury Secretary’s comments that the government was “looking at how experimentation can take place in the digital world and cryptocurrency”. ghosts,” she had told CNBC-TV18, adding that “a very calibrated position will be taken” on cryptocurrency.
Following the listing for Winter Session release, sources in the security organization said the government is not going for “an outright ban” and that regulatory mechanisms will be put in place to prevent misuse of cryptocurrencies. But cryptocurrencies, they said, will not be recognized as legal tender, as doing so would be dangerous to the country’s fiat currency and tax system.
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How is cryptocurrency trading possible in India?
Responding to a question in parliament during the latest budget session about whether there was a ban on “bitcoin trading in the country”, the Union Ministry of Finance issued a circular from the Reserve Bank of India (RBI) in April. 2018 who had “advised all entities regulated by it not to trade virtual currencies. However, it had noted that in a 2020 ruling, the Supreme Court overturned the RBI circular. That has led Indian cryptocurrency investors to have can act.
But despite the supreme court order, several private and public banks had reportedly continued to discourage their customers from trading cryptocurrencies, citing the original RBI circular. That prompted the central bank to make it clear last month that banks cannot cite that circular to deny services for cryptocurrency-related transactions.
“Given the order of the Hon’ble Supreme Court, the circular is no longer valid as of the date of the Supreme Court ruling, and therefore cannot be quoted or quoted from,” RBI said.
Why are governments wary of cryptocurrencies?
Several countries around the world have banned cryptocurrencies, including China, which had emerged as a major player in cryptocurrency mining. Most governments are concerned that unregulated digital currencies will undermine the prerogative of central governments to issue fiat currency and regulate monetary policy, even as cryptocurrencies become a conduit for tax evasion and wealth shifting. their jurisdictions.
As the Treasury Department reiterated in Parliament in August this year, “The government does not consider cryptocurrencies to be legal tender or currency and will take all measures to prevent the use of these crypto assets to fund illegal activities or as part of eliminate the payment system”.
It had noted that a high-level inter-ministerial committee set up to examine issues related to virtual currencies recommended that “all private cryptocurrencies, except all state-issued cryptocurrencies, be banned in India”. But the ministry had stated that the government “will proactively explore the use of blockchain technology to usher in it”
digital economy”. Blockchain is the distributed ledger system that anchors the cryptocurrency supply. Governments and businesses are said to explore its potential to transform a range of sectors.
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