In the law that the government is enacting to ban cryptocurrencies, trading, mining and holding it is classified as a crime.
Discussions have started about the future of the world’s most expensive cryptocurrency. Everyone is amazed at the incredible speed at Bitcoin, constantly making records. Many times experts have expressed alarm that the day this bubble will burst, everything will be destroyed.
At the same time, questions are also being raised about its future in India. The attitude of the Reserve Bank of India is clear that no such currency can be approved which cannot be regulated. So what will be the future of cryptocurrency like bitcoin…
If the sources are not wrong, then the central government may soon ban trading and mining of cryptocurrency. At the same time, its holding is also ready to be banned. For this, the government is going to make a strict law. Some media reports have said that the government will impose fines on the holding, trading and mining of cryptocurrencies. Tax can also be levied on those holding crypto. Not only this, there can be jail in it as well.
In fact, in the law that the government is making to ban cryptocurrency, its trading, mining and holding has been classified as a crime. If the law to ban crypto passes the Digital Currency Bill, 2021 from Parliament, India will be the first country to ban cryptocurrency by law.
Reasons for opposition to cryptocurrency by RBI:
- As a currency: Cryptocurrency is not legalized as a currency by any country or central bank in the world. This cannot be accepted due to the reliability of cryptocurrency and lack of support from any financial body.
- As Commodity: The share price of any business entity in the stock market is determined by its business and its demand in the market. But given the lack of transparency in cryptocurrency and the volatility of its prices. Many experts have expressed concern regarding the exchange of cryptocurrencies.
Benefits of cryptocurrency:
- Transactions in cryptocurrency do not require the role of a bank or any other middleman. So transactions can be done through this channel at a very low cost.
- Trading in cryptocurrency does not require any form identity card. So anyone can join the financial sector through this system.
- The biggest advantage of cryptocurrency is its secrecy. In the absence of the requirement of a ID proof, people’s private information is protected during the transaction.
- Cryptocurrency can be used in any country in the world at no extra charge. However, cryptocurrency has not been legalized by any country as a currency.
Side effects of cryptocurrency:
- Cryptocurrency does not get the recognition of any country or central bank, due to which there is a fear of volatility of its value. For example, in December 2017, the price of bitcoin was more than US $ 19 thousand, while in December 2018 its price decreased to US $ 3200.
- Due to the secrecy of cryptocurrency there is a fear of its use in terrorist or other illegal activities.
- Private cryptocurrency is not affected by the monetary policies of the government. So promoting the use of cryptocurrencies can be detrimental to the country’s economy.
- Millions of large computers are used in cryptocurrency for the systematic operation of transactions, which is a major cause of energy wastage.
- Currently, when many countries of the world are trying to stop the tax evasion by multinational companies. In the absence of any adjusted policy of regulation, keeping cryptocurrencies out of illegal currency status, tax evasion.
Stopping efforts will make it more complicated. Although, government wants to use the blockchain technology used in cryptocurrencies.
What is blockchain technology?
- A blockchain is a type of decentralized distributed ledger , in which information related to the exchange is encrypted as a block.
- Each data (block) entered in the blockchain has its own unique electronic signature, which cannot be changed. In addition, the electronic signature of the previous block is also recorded in each block, so that they can be easily placed in a series.
- Once any transaction is recorded in the blockchain, it can neither be removed nor modified from there.
- The entire information of blockchain exchange is preserved in thousands (or millions) of computers, rather than being stored in one place.
- Any new transaction is verified by all computers connected to the database (in blockchain technology these are known as nodes).
By the way, Bitcoin continues to be in the news. On the one hand, new peaks are being created every day in digital currency. On the other hand, the market of news on cryptocurrency ban by the government is also hot. Now, news agency sources have quoted that the preparation of the ban on all cryptocurrencies including bitcoin in India has been completed.
In such a situation, India will become the first major country to make cryptocurrency illegal.
Jail for buying cryptocurrency
Under the upcoming law, buying, generating, trading, selling, transferring cryptocurrencies can also be imprisoned for 10 years. If the government enacts a law on cryptocurrency, then the holder of all cryptocurrencies will have time for 6 months exit after implementing it, that they will be able to get their money back by paying penalty to the government.
By the way, no clear comment has been made by the source on the jail related provisions. The situation on this will be clear only when the law comes in public. However, in 2019, a government panel made about this suggested a jail term of up to 10 years for those who trade in cryptocurrency after the law passes. In such a situation, fear about this is also natural among investors.
According to various reports, even though the government is going to ban bitcoin and other cryptocurrencies, the government wants to use the blockchain technology for their own good.
Ajit Khurana, former CEO and Angel Investor, Zebpay, said in a conversation that blockchain technology looks as futuristic as artificial intelligence and machine learning.
What do experts say?
In 2019, a committee of the government recommended 10 years of imprisonment. For those trading, holding, mining or transferring cryptocurrency. However, whether the current bill banning private digital currency has a provision for punishment or not is not clear. The bill is currently in the final stages.
Former finance secretary and head of the committee, Subhash Chandra Garg said that our committee had recommended a ban on cryptocurrencies. Its use should be banned as a currency. But, it can be kept as an asset. It can also be used as a utility through technology.
According to WazirX co-founder Nischal Shetty, the government should only have the right to launch cryptocurrency. It is not their right to allow/disallow private players to launch or release cryptocurrencies. If the government is doing any work in this direction, then it should be viewed positively from the investors.
What will happen to investors?
If sources are to be believed, the cryptocurrency bill 2021 provides that Indian companies and the public will not be able to use any such digital currency as their asset. However, existing investors may get a chance to withdraw from Bitcoin or other digital currency. The final decision will be taken by the government on this. Not only this, if an investor wants to legalize his crypto asset, meaning to withdraw his money, he will have to pay a heavy penalty to the government.
According to sources in the Finance Ministry, the crypto bill is in its final stages. How much the penalty will be, how much time it will take to get out, it is not clear yet. Experts believe that the purpose of digital currency is to prepare the way for indigenous cryptocurrency.
Union Minister of State for Finance Anurag Thakur recently said that the central government is exploring new technologies with open mind and evaluating them. This new technology also includes cryptocurrency. Blockchain is a new emerging technology. Also, there are reports of a ban on cryptocurrencies in India at a time when bitcoin prices are at a record level.
There is no rule in India right now
There is no definite guideline regarding cryptocurrency in India. In 2018, the government banned cryptocurrency services through a circular. After this, the Supreme Court, while hearing the entire case, gave this recognition with a stay on the circular. However, the Supreme Court then asked the government to enact a law on digital currency.
Supreme Court Order:
As per the order of the Supreme Court, RBI’s ban on trading of virtual currency is not rational, because –
- RBI could not underline any danger or mistake in the way of trading of virtual currency.
- There is no restriction on trading of virtual currency or cryptocurrency in India.
- The Supreme Court while hearing the case also underlined the differences of the government side.
It is important to note that the Inter Ministerial Committees, constituted to determine the law on the regulation of cryptocurrency, had approved the business of cryptocurrency in its 2018 report. But in the year 2019, the same committee suggested a complete ban on cryptocurrencies issued by the private sector.
Opinion of the Central Government on Cryptocurrency:
Answering a question regarding cryptocurrency in Parliament on July 16, 2019, the Union Minister of State for Finance stated that there is no restriction on cryptocurrency in the country.
According to the Union Minister of State for Finance, there is no specific law in the country for cryptocurrency related matters but in such cases action will be taken under the existing laws of RBI, Enforcement Directorate and Income Tax Department.
In cases related to cryptocurrency, the police can take action under the sections of IPC.
What will be the effect on current investors?
According to an estimate, there are currently about 8 million people investing in cryptocurrency in India. The total value of the investment can be close to 100 billion rupees. According to the news, such investors can be given 6 months to exit cryptocurrency investment after the ban. Investors will also be fined for not coming out of the investment within this time frame.
In 2018, investment in cryptocurrency in India was almost paused due to instructions from RBI banks. However, the Supreme Court rejected the RBI circular in March 2020, which again opened the way for investors to invest in cryptocurrencies.
