Outlawing cryptocurrency is not a novel concept in India; the Reserve Bank of India (RBI) effectively outlawed it in 2018. This reduced interest in cryptocurrencies, but in 2020, the Supreme Court overturned the RBI ban and permitted cryptocurrency trading. However, as evidenced by The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, there is renewed interest in prohibiting cryptocurrency trading. Possession, mining, trading, and transferring any cryptocurrency assets would be illegal and would result in heavy fines.
Cryptocurrency: A Quick Introduction
A cryptocurrency is a form of digital currency that is decentralized and encrypted using cryptographic techniques. Although they are not legal tender and are not backed by any central government, they are still used for trading, investing, and saving for future use. Bitcoin, Ethereum, and Ripple are among the most popular cryptocurrencies. Decentralization means that there is no central government in charge of keeping track of transactions, and anyone can initiate one. These transactions are recorded and transmitted by independent computers across multiple distributor networks using Distributed Ledger Technology.
To understand in Hindi, watch this video: What is Bitcoin | क्या है बिटकॉइन | जानिए 10 मिनट में हिंदी में #Bitcoin
What Is The Need To Ban Cryptocurrency?
Several concerns were raised by the advisory board about cryptocurrency bans, including price fluctuations, consumer risk, the impact on power consumption, and the potential use for criminal activity. An alternative payment mechanism, it is argued, could destabilize the current banking system. As a result, the Central Bank’s ability to exert monetary policy control will be harmed. On November 8, 2016, for example, demonetization of all 500 and 1,000 banknotes would be impossible. Furthermore, it has the potential to undermine a portion of the government’s power structure. Furthermore, the majority of countries, including India, want to create their digital currency or central bank digital currency (CBDC).
According to the official, the bill would make the possession, issuing, mining, trading, and transferring of crypto-assets illegal, making it one of the world’s harshest rules against cryptocurrency.
Instead, the plan would give cryptocurrency investors up to six months to unload their holdings before facing fines, according to the official, who asked not to be identified because the bill’s contents aren’t public. Officials are optimistic that Prime Minister Narendra Modi’s government will be able to pass the bill because it has a strong majority in parliament.
If the ban is enacted, India will be the first large economy to make cryptocurrency ownership illegal. Possession is not punishable in China, which has banned mining and trading.
‘GREED’ PREVAILS OVER ‘PANIC’
Bitcoin, the world’s most popular cryptocurrency, set a new high of $60,000 on Saturday, nearly doubling in value this year as its acceptance for payment has grown thanks to high-profile supporters like Tesla Inc CEO Elon Musk.
Despite official threats of a ban, transaction volumes are increasing in India, with industry estimates estimating that 8 million investors already hold 100 billion rupees ($1.4 billion) in crypto assets. There is no official data available.
“Every month, the money multiplies rapidly, and you don’t want to be on the sidelines,” said crypto-investor Sumnesh Salodkar. “Greed is driving these choices, despite people’s worry over the prospective prohibition.”
Top Indian officials have referred to bitcoin as a “Ponzi scheme,” although Finance Minister Nirmala Sitharaman allayed investor fears earlier this month.
“I can just offer you this hint,” she told CNBC-TV18, “that we are not closing our minds, that we are looking at methods to do experiments in the digital world and with bitcoin.” “A very calibrated position will be taken.”
Last month, the Reserve Bank of India expressed its alarm once more, citing cryptocurrencies as a threat to financial stability. The central bank has also been working on developing its digital currency, which the government’s plan will also encourage, according to the official.
Despite the market’s euphoria, investors are aware that the current bull market is in jeopardy.
“If the restriction is official, we have to obey,” Naimish Sanghvi, a digital currency trader who began trading last year, told Reuters, referring to fears about a prospective ban. “Until then, I’d rather build a portfolio and ride the market than panic and sell.”
Inference
The government has opted for much-needed concrete cryptocurrency legislation; but, the prospect of a complete ban has investors anxious. The exact legal and financial impact on investors is uncertain because the measure has not yet been made public. As a result, every attempt at restriction will compound the hazards, regardless of how the law is applied. In the end, such prohibitions will have little impact on investors because cryptocurrencies, such as bitcoin, have various markets and are gaining global acceptability.