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Govt To Ban All Private Cryptocurrencies – PDF Download

What’s happening?

  • The government is set to table the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 in the winter session of Parliament.
  • The bill seeks to ban all private cryptocurrencies with ‘few exceptions’, the official document shared by the government says.
  • The initial document doesn’t provide any clarity on these exceptions.
  • It states that the decision has been taken to promote the official digital currency which will be issued by the Reserve Bank of India.
  • The RBI shown the intent of bringing its own crypto but is yet to announce one.
  • “To create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India. https://youtu.be/al4dBDPtJfgv
  • The Bill also seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses,” the official document accessed by India Today Tech reads.
  • The Crypto bill is part of the 26 bills that the government plans to introduce in the winter session.
  • The government was planning to ban all cryptocurrencies last year and was even planning to introduce a bill during this year’s Budget.
  • However, the bill was scrapped, and a committee was formed to discuss the matter further with the stakeholders.
  • Since then, it has given hints that cryptocurrencies can co-exist with the Indian rupee but might be regulated.
  • The Bill that it plans to table, states otherwise.

RBI’s stand

  • RBI, on the other hand, has been a little critical of Bitcoin and cryptocurrencies.
  • Only a few days back, RBI governor Shaktikanta Das underlined the concerns around cryptocurrencies, calling them a threat to any financial system, at least till they are regulated.
  • He said that cryptocurrencies are serious threats to the macroeconomic and financial stability of the country and also doubted the number of investors trading on them as well as their claimed market value.

What does the ban actually means?

  • When we say the ban, we mean that the transactions between the bank and your crypto exchanges will be stopped.
  • This means that you will not be able to convert your local currency into buying any kind of cryptocurrency.
  • But what if you send your cryptos to someone who is not an Indian resident and belongs to a country where crypto is legal.
  • Well, in that case, you can always send your acquired crypto, and get the equivalent INR in your bank.
  • However, this procedure of exit would come at a cost.
  • The foreign exchange cost and penalties would cost you more than the actual exchange fees, had there been no ban in your own country.
  • By the above method, we see that the transactions that involve crypto are still possible.

Why it is difficult to ban?

  • No government can ever tame the internet.
  • The government tried to ban
  • The gaming community in India identified VPNs that would still make PUBG accessible to them.
  • The government tried banning porn, but anything that is accessible to everyone, or is made available on the cloud, can never be fully tamed.
  • The same goes with the decentralised and open source-based cryptocurrencies as well.

So what is Central bank digital currency?

  • A CBDC is the legal tender issued by a central bank in a digital form.
  • It is the same as a fiat currency and is exchangeable one-to-one with the fiat currency.
  • CBDC is a digital or virtual currency but it is not comparable to the private virtual currencies that have mushroomed over the last decade.
  • Private virtual currencies sit at substantial odds to the historical concept of money.

Blockchains need crypto to function

  • Earlier this year, the Indian state of Maharashtra announced its partnership with blockchain startup LegitDoc to issue diploma certificates to fight against the persistent problem of fake degrees plaguing the country’s education system.
  • Even the Central Board of Secondary Education (CBSE) introduced blockchain to go paperless and make results tamper-proof.
  • On paper, these are blockchain technology use cases.
  • But, behind that, it’s a public blockchain record that needs Ether — the cryptocurrency which powers the Ethereum platformto pay the network fees for validation.
  • And, this is true for all blockchains.

From legal perspective

  • India already tried to ban cryptocurrencies once when the RBI issued a blanket ban in 2018.
  • This was then later reverted with the Supreme Court stepping in to say the move was ‘unconstitutional’.
  • “We have fundamental rights today to do business, to pursue various goals that an individual wants to pursue, and there can only be reasonable restrictions on that.”
  • The Indian government, if issuing a blanket ban, would have to meet that test of a ‘reasonable restriction’.

India’s cryptocurrency market?

  • It’s worth mentioning that India is one of the biggest cryptocurrency markets in the world.
  • A recent report suggested that the country has more than 10 crore crypto owners while homegrown crypto exchange platforms have maintained that around 2 crore Indians have invested in cryptocurrencies.

Q) MANI app launched by RBI for which of the following?

  1. Visually challenged person to identify the currency notes
  2. Transfer of money from one person to another
  3. Identify the fake notes in the system
  4. For Start-up to avail faster credit

 

 

 

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