India was not a pro-crypto nation. But nowadays, the trend is changing. Reports suggest that approximately 5 million people are using cryptocurrency in India. But it is only three percent of the global digital currency market.
In 2018, the Reserve Bank of India issued a ban on all virtual currency dealings. The earlier stance of RBI was that it would not intervene in matters of digital currency. So, this action was seen as extreme by economists. In 2020, the Supreme Court ruled that the ban on virtual currency is illegal.
What RBI says
In 2013, the central bank had warned users about the security concerns related to Bitcoins.As the value of bitcoin is highly volatile and the transactions are anonymous, RBI had issued a statement that these features of bitcoin are against money laundering regulations. Data security issues and issues relating to the monetary policy make Reserve Bank worried about bitcoins. RBI expressed concern about bitcoin trade. In 2018, a circular was released by RBI, stating that it had banned all financial institutions from virtual currency dealings. In Supreme Court, RBI arguments that virtual currencies are spreading like a contagious disease.So, to prevent this, people should avoid virtual currency dealings through websites like epodcastnetwork.com
What is the verdict of the Supreme Court
SC said that to issue a ban, it should pass the test of proportionality. To pass the proportionality test, it should satisfy Article 19(1)(g). This article states thatCitizens of India have the right to follow any profession or continueany trade or business. Supreme Court ruled that the ban makes a direct impact on fundamental rights.So, the ban should be lifted.
How to fix the loopholes
- Central Bank should rethink about their policies surrounding Bitcoins. RBI should introduce new regulations by keeping technological advancements in mind.
- It is important to renew our regulatory frameworks because everyday new technological innovations are introducing in every field.
The government of India is planning to introduce a ban on bitcoin trading. Government is ready to encourage blockchain technology but is not ready to accept virtual currency trading.After the SC verdict, a 450% increase is seen in the Indian bitcoin trading market. As per various reports, 883% growth was reported in the first quarter of this financial year.
India’s decision is important because many Asian countries are planning to regulate virtual currency trades. China is planning to launch its own virtual currency. The technology behind bitcoin, blockchain technology, can be used in managing land documents and in pharmaceutical supply. This proposal is given by Niti Aayog, but they are against the bitcoin trade. From websites like the 1G profit system, we get detailed information about other trade regulations.
Ban will affect millions of people who are trading in digital currency. Instead of a full-fledged ban, India should think about a new regulatory framework. This is the opinion of famous economists.
Happenings in short
- 2013 | Initial stages of cryptocurrency; some exchanges were open.
- 2014 | 13 large exchanges opened. Twenty small exchanges are also in the opening stage.
- July 2017 | Recommendation by the government to control cryptocurrency due to its usage for money laundering and terrorism purposes.
Dec 2017 | The value of bitcoinsaw a great spike of $20,000.
- Feb 2018 | Finance Minister Arun Jaitley says that Bitcoins are illegal.
April 2018 | RBI bans financial institutions from using virtual currencies.
July 2018 | P2P exchanges were opened.
Oct 2018 | First virtual currency ATM was launched by Unocoin in India.It’s founder, Sathvik, was arrested.
- 2019 | Government committee recommends jail term and fines.
- 2020 | Supreme Court lifts the ban.
Lifting the ban on virtual currency
Lifting the ban on digital currency have a greater role in the usage of blockchain technology for other purposes.
Uses of blockchain technology
- It is the technology behind bitcoin.
- It helps in the verification of P2P bitcoin transactions.
- It stores every transaction in an electronic ledger.
- It detects fraud in transactions.
- It is an important feature of the new Industrial Revolution.
- It can make $3.1 trillion by 2030.
An active bitcoin market will help to strengthen India’s economic sector. So, in this phase of new technological innovation, it is very important to make new regulatory frameworks that also includes cryptocurrencies.