Cryptocurrency interestingly arose as bitcoins in the year 2009 and its innovation is considerably more established. In any case, they acquired prominence lately. Digital currency works in a decentralized way so there is no authority behind it. Due to this, the government is not supportive of cryptocurrency. Digital money has arisen as a promising venture on the ground. It very well may be seen that regardless of whether the world goes down, digital money doesn’t. For instance, on account of the overall pandemic COVID-19.
Introduction
Cryptocurrency money is virtual cash that depends on blockchain innovation. This sort of money deals with cryptography. It is decentralized implying that no authority is there behind it to regulate and control it.
The number of types of cryptocurrency is increasing on a regular basis. There are over 4000 digital currencies as of mid-2021 yet it is accepted that the best 20 cryptographic forms of money hold a piece of the market share up to 90%. Earlier people used to invest in gold as an asset to protect their money against inflation.
Over the past couple of years, more people found Bitcoin to be a better alternative asset. Approximately two crore people have invested in Cryptocurrency till today. Even institutional investors are converting their cash into Bitcoin to protect their finances against inflation. Cryptocurrency is widely advertised in India by famous film actors.
Bitcoin is legal or illegal?
In India, there is no central body that has sanctioned or regulated Bitcoin as a payment method. Furthermore, there are no established laws, regulations, or standards for addressing conflicts that may emerge while dealing with Bitcoins. As a result, Bitcoin transactions have their own set of dangers. However, given this context, it is impossible to conclude that Bitcoins are unlawful, as there has been no prohibition on Bitcoins in India so far.
The Reserve Bank of India published a circular in 2018 banning all kinds of cryptocurrency in India. The same was challenged in the Hon’ble Supreme Court and in March 2020 the said circular was quashed and set aside
Regularisation of Cryptocurrency
Whether an activity is in compliance with the law of the land is critical to understand before wading into the domain.
Here’s a simple analogy:
Think of the Internet, it is free, used by billions of people around the world, yet no country owns it or controls it. Cryptocurrency (or crypto, in short) is also somewhat like the Internet. It is not owned or controlled by a country or a bank. They are not issued by the central bank of the country (in our case, the Reserve Bank Of India) as legal tender. Neither are they recognized by the Government as legal tender nor are they regulated by the RBI. There are no laws that prohibit (or allow) trading in crypto.
In that sense, cryptocurrency is like any other asset class such as gold, commodities, or real estate. People trade in gold without the government creating a law for it. The same is the status of cryptocurrency at the moment.
2021: Announcement of Crypto Bill
However, the battle for cryptocurrencies in India was not over yet. On Jan 29, 2021, the Indian government announced that it will introduce the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 to create a sovereign digital currency and subsequently put a blanket ban on private cryptocurrencies. In November 2021, the Standing Committee on Finance met the Blockchain and Crypto Assets Council (BACC) and other cryptocurrency representatives and concluded that cryptocurrencies should not be banned but regulated.
In early December 2021, Prime Minister Narendra Modi also chaired a meeting on cryptocurrencies with senior officials. It was also indicated that cryptocurrency will only be traded and will not be used as normal currency.
Whether to invest in cryptocurrency or not?
It is as safe as any other investment class and is subject to underlying market risks such as mutual funds or stock investments. However, share trading and mutual funds are regulated by the government-appointed Securities and Exchange Board of India (SEBI). Due to its decentralized nature, the trading of cryptocurrencies doesn’t fall under the ambit of any regulator and they can be volatile.
So, it is advised those who have already invested in cryptocurrency or are planning to invest in it should wait for further laws to be enacted in the same area.
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