Due to the strong development in the country amid the lack of regulations, India has recently paid more attention to cryptocurrencies. Although things are likely to change drastically, the government is eager to bring in the rules and Regulations in the Digital Currency Sector, Prime Minister on Thursday, 18 November Narendra Modi Said cryptocurrencies “should not fall into the wrong hands and spoil our youth”, urging all democratic countries to come together and ensure that such things do not happen. The government and the RBI had recently hinted at setting up a stronger regulatory control. cryptocurrency To prevent money laundering and terror financing rather than banning it outright.
Speaking in the virtual keynote address at the Sydney Dialogue, PM Modi said, “India’s industry and service sector is undergoing a massive digital transformation by harnessing technology to transform resources and conserve biodiversity. Take for example the crypto-currency or bitcoin. It is important that all democratic countries work together on this and ensure that it does not fall into the wrong hands, which can spoil our youth.”
Comments a. comes in the background of High level meeting chaired by Prime Minister Last week on the regulation of digital tokens. Cryptocurrencies are still not taxed in India, but they are not recognized as official currency. However, according to a report in Economic Times, cryptocurrencies may be allowed in India as an asset class instead of being banned. This means that it will not be recognized as legal tender for settlement of transactions, but can be held in the form of an asset such as gold, shares or bonds.
Speaking about Modi’s recent comments on cryptocurrencies, WazirX founder Nischal Shetty took a neutral stance. “Our Honorable Prime Minister talking about crypto and the need for regulation is a great thing for India. It means a lot to the crypto ecosystem. It further strengthens our belief that India is a leader in this global phenomenon. Will remain,” he told News18.com.
As the Economic Times reports, the government is on track to finalize a law on the matter, banning the use of crypto for payments, within two or three weeks. “Active solicitation will not be allowed… details of the bill are being finalized,” the report quoted a government source as saying.
“A complete ban on cryptocurrency will not be justified as the world is moving in this direction. As a country if we ignore it we will be left behind. We should adopt it with proper rules,” said Kasa founder and CEO Kumar Gaurav said in a note to News18.com
“The idea of a CBDC (Central Bank Digital Currency) in principle is good and many countries are working towards it, but it is also important to understand that even if a CBDC comes along, it will have to coexist with private cryptocurrencies. Bitcoin can still be used as a reserve asset against which central bank CBDCs can be judged,” he said.
On the other hand, the Reserve Bank of India has repeatedly warned against cryptocurrency, worrying that the country’s macro-economic aspects and financial stability would be hampered if the coins were allowed to flow freely. . Addressing an SBI conclave on Tuesday, November 16, he said virtual currencies involved “very deep issues” that could pose a threat to India’s economic and financial stability. “At RBI, we have started taking a closer look at this. Business models and strategies of banks. Take your business decisions, we will not interfere, but we will see what kind of vulnerabilities and what kind of risks are being created. , and our first priority will be to caution the banks themselves,” he said.
However, analysts said that the unanswered questions need to be addressed before central banks can replace cryptocurrencies with cash. “We cannot compare crypto to money, different cryptos have different utilities, some of which are fundamentally very strong, e.g. ethereum. The web3 revolution is happening at a rapid pace but our financial system It is old and needs to evolve. And CBDC may be a step in that direction, but it is too early to say whether governments across the world have got it right. Coming to RBI’s stand on CBDC, there are still many There are unanswered questions that RBI will have to address before switching to cash. Going forward, the industry will grow based on technological advancements and the government’s stand on it,” Gaurav said on RBI’s inhibitions regarding cryptocurrencies.
The government is also planning to impose a tax on virtual currencies soon. According to reports, the upcoming legislation is set to address the share of taxation on cryptocurrencies, which is likely to be 1 percent. Platforms that do business with cryptocurrency can be classified as an e-commerce platform. The proposed bill on cryptocurrency is expected to be introduced during the winter session of Parliament.