The Center has proposed to introduce a Bill on Cryptocurrencies in the winter session of Parliament beginning November 29 to facilitate the creation of an official digital currency by the Reserve Bank of India (RBI). The bill seeks to ban all cryptocurrencies except a few and introduce a system to regulate crypto transactions in India. However, following the government’s proposal, the values of major digital currencies declined significantly, with Bitcoin and Tether losing the most.
What is cryptocurrency?
Investopedia defines cryptocurrency as a digital or virtual currency that is cryptographically secure, making it nearly impossible to counterfeit or double spend. Most cryptocurrencies are decentralized networks based on blockchain technology – a distributed ledger implemented by a separate network of computers.
Cryptocurrency in India: 10 Points
1) The Government of India has sought to introduce the Official Digital Currency Bill, 2021 of the Cryptocurrency and Regulation of Digital Currency Bill, 2021 in the winter session of the Parliament to regulate the cryptocurrency framework in India.
2) RBI is likely to introduce an official form of cryptocurrency. If the bill is passed in its current form, all private cryptocurrencies will be banned in India, with a few exceptions.
3) As news of the ban broke out, the values of the major cryptocurrencies plummeted. On Tuesday, Bitcoin declined by 18.53%, Tether by 18.29% and Ethereum by 15.58%. According to CoinDesk, most cryptocurrencies remained in the red on Wednesday as well.
4) The government’s decision to introduce the bill came after Members of Parliament, in a panel meeting on 15 November, came to the conclusion that Cryptocurrencies Can’t Be Stopped and, therefore, must be regulated. Flagging off full-page crypto ads in national dailies, lawmakers said the security of investors’ money is the most pressing concern for all members.
5) RBI has been expressing its serious concern about cryptocurrencies since 2017. RBI circular dated 6th April, 2018 prohibited banks and institutions from providing services in respect of virtual currencies. However, on March 4, 2021, the Supreme Court quashed the circular.
6) In a recent event, RBI Governor Shaktikanta Das said that there is still a Lack of serious and well thought-out discussions On cryptocurrencies in a public place.
7) The SC Garg committee had concluded that cryptocurrencies cannot serve the purpose of a fiat currency as private cryptocurrencies are incompatible with the essential functions of money/currency.
8) Indian crypto exchanges and industry bodies recently published a joint advertisement, which claimed that crypto investments by Indians have crossed Rs 6 lakh crore and the number of investors has grown rapidly to over 100 million.
9) Addressing the Sydney Dialogue on 18 November, Prime Minister Narendra Modi had said that all countries should ensure that cryptocurrencies “do not fall into the wrong hands”.
10) Currently, El Salvador is the only country that has given cryptocurrency the status of legal tender.
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