Nowadays, cryptocurrency has become a very hot topic for discussion. But, the way Indian government is looking towards it doesn’t look good at all.
In March 2018, the RBI had advised all the entities regulated by it not to deal with virtual currencies or provide services for facilitating any person or entity in dealing with settling them. However, the Supreme Court set aside the RBI circular on March 4, 2020.
In 2018–19, Govt committee recommended to ban all cryptocurrencies and should have our own central bank backed digital currency. And committee also said that if someone trades in private cryptocurrencies they may be subjected to penalties and imprisonment also. But it was not approved.
Now the government is saying that we need to formulate a law which regulates cryptos:
“The law will create a facilitative framework for creation of the official digital currency to be issued by RBI” and also it will “prohibit all private cryptocurrencies in India, however it will allow for certain exceptions to promote the underlying technology of cryptocurrency and its uses”.
Now, the question arises “Why India needs Crypto regulations at all?”
· Money Laundering:
Due to its decentralized and end to end encrypted nature, it may lead to the transactions of black money.
· Terrorism and Criminal Activities:
Since these transactions take place online and are encrypted, so anyone outside the country can also fund the terror activities and other criminal activities like drug trafficking and smuggling in India and also the users who has limited knowledge may not know about these transactions since they are totally encrypted.
· Investment Bubble:
If the investment bobble of these cryptocurrencies burst then it may lead to a huge loss of money of investors and they won’t be provided with any investment security because Cryptos are not regulated by the government.
What would be the advantages if the cryptocurrency regulation law comes into picture?
- It would aware more people towards adopting this new technology of blockchain by increasing the awareness towards cryptocurrency and the technology behind it.
- Since, cryptos are end to end encrypted and decentralized so if a law comes to regulate it then it may also prevent hacking and any other fraudulent activity since it would be backed by central bank.
- It would push India towards digital economy.