What is the Government’s Stand on Virtual Currencies?
The Reserve Bank of India has continuously cautioned the citizens of the Country about the risks and threats they can face by the usage of cryptocurrencies. Seeing the risks associated with the usage of digital currencies, the Reserve bank of India has come up with a regulation wherein it will not provide any support to services or companies dealing with virtual currencies.
It has also released a circular regarding the same. The circular states that the usage of virtual currencies does have the potential to improve the efficiency of the financial system. But, it does raise some concerns on issues such as market integrity, customer protection, money laundering, and many others.
In the wake of this circular, the Reserve Bank of India has made it clear that regular entities that are already providing services for digital currencies will lose their relationship within a specified duration of time.
What do these regular entities mean? Regular bodies are the banks that come under the stature of the Reserve Bank of India. These proper entities were dealing in digital currencies for rupees (INR) on and off-ramps. Hence the Reserve Bank of India has ordered to stop providing these services.
But what is the stand of the Indian Government on this issue?
Does it support the usage of cryptocurrencies? No, the Government is fine with the stand of RBI on the topic of digital currencies. Recently, even the Finance Minister of India, Mrs. Nirmala Seetharaman, has been vocal about this issue. She has stated that even other countries are trying to follow the same route as India and has supported India in this stance.
Coming to the original question of the article, is the Country still interested in Cryptocurrency? Probably yes, probably not. Yes, the stand of the Government, combined with the threats associated with digital currencies, has brought a bit of fear in the citizens of India. But has the Country experienced any risks due to the usage of cryptocurrencies?
Yes, it has.
Why is the Country facing threats or scams due to Digital Currencies?
The first thing to note here is that this stand of the Government is primarily due to the decentralized nature of Bitcoin and other virtual currencies. The central scam which comes to everyone’s mind is the GainBitcoin Scam, which got carried out by Amit Bharadwaj. Many citizens fell prey to this prank and have lost thousands of their hard-earned money.
But aren’t the citizens familiar with the nature of Bitcoin? Mostly no. India is a country where most of the citizens belong to the middle-class sector. So, these people are ignorant about the nature of Bitcoin and do lack sufficient knowledge on using these cryptocurrencies. So, anyone can come with a scam and fool such people.
And because the Country houses people who belong more to this sector, the Government has taken the stand of banning cryptocurrencies from avoiding such threats in the future. The Government is trying to protect the Indian customers in falling into such dangers.
Right now, the Government wants people to focus on important issues like improving the technology and economy of the Country rather than falling into such scams. But is the Government right in its stand? To be frank, no.
Banning virtual currencies should not get considered an option. Rather than that, the Government can come with some innovations steps on avoiding the threats happening because of Bitcoin or other digital currencies.
But the Reserve Bank of India has said that it will launch its version of centralized digital INR sooner. This version of INR will have the same technology which the virtual currencies possess, i.e., blockchain. But why is this version being introduced? Isn’t it directly telling that the Government is unable to handle Bitcoin hence is launching its own?
See the step of the Government might get discussed for a long time, but if you see the underlying problems in our country, then what the Government did might hold the right place. India is a
highly populated country, and managing something as decentralized as Bitcoin in such a high populating country will be a daunting task for anyone.
An innovative step to stop such threats has to get sketched neatly only after it promises to provide the best results. Getting such thing done will not only take a lot of time but also comes to other threats added to it in case if it doesn’t perform well, right? So, the Government might be right in its stand of banning cryptocurrencies.
Are there other countries that have had the same stand as India?
And not just India, even countries like China and South Korea have limited the usage of digital currencies in their Country. This step was due to its decentralized nature. But the South Korean Government has made a more stringent law for the usage of digital currencies instead of banning them.
Even countries like the U.S., Australia, and Japan have made stringent laws regarding the usage of cryptocurrencies. But if you see here, the two more populated countries in the world India and China have banned the use of cryptocurrencies. So a high population might be a factor for them to take this step.
Where does the future of Cryptocurrency lie in India?
Just like China, India can witness:
5.1 A massive boom in the over the counter trades through services like LocalBitcoin. China saw the same boom when the Government banned the usage of digital currencies in the Country.
5.2 India might witness a prominent spike in the peer-to-peer offline trading.
5.3 The step might result in India to fall behind in the race of blockchain and crypto technology. It might also get resulted in most of the Indians shifting to other countries such as Canada or U.S., where such technology gets widely used. These people might even look for more jobs such as Blockchain Developer or other Blockchain-related jobs.
This attribute might lead to a massive brain drain in our Country, as most of the people who know technology accurately will be shifting to other countries.
5.4 This stance by the Indian Government will scare and demotivate most of the people who thought of entering the crypto market for business or investment.
5.5 Coming to the most scarier point here, people might disobey the Government entirely and will continue their usage of digital currencies.
Yes, this might happen as we already stated India is a densely populated country, and managing something here requires more proper planning, which will cost more time to do so.
Though these points get considered here because they happened in other countries that banned digital currencies, these might not happen in India as the RBI has announced it will come with its version of digital currency sooner. So, there are chances that our Country might not experience such drastic changes.
What happens if someone disobeys the laws set by the Government?
And coming to the point of people disobeying the Government and using digital currencies, the Government has come up with a step to prevent it. The working committee of the Government has proposed a fine of 25 Crore Rupees and also imprisonment of up to 10 years if someone gets indulged in such activities.
But what for those people who have already invested in Bitcoin and other virtual currencies? For such people, the Government might give a period of up to three months to dispose of their digital currency.
The Reserve Bank of India and the Indian Government have cautioned the citizens of the Country earlier also regarding the usage of digital currencies. This step is not because the Government is uninterested in Bitcoin or other virtual currencies. But right now, it is more focussed and interested in improving sectors like technology, economy, employment, and infrastructure of the Country.