Today the world and its economy are unavoidably transitioning towards a digital ecosystem. Every transaction is going paperless- investments, transfers, or name it! The global market is booming with the effect of cryptocurrencies. You can call it a virtual or decentralized currency that undergoes encryption. A means of payment similar to the traditional currencies like a dollar that additionally, is inclusive of digital data exchange. It has shown numerous boons. One among them is the easy reach out of enterprises to foreign markets, instead of limitations to the domestic ones.
However, a few countries such as Nepal and China have passed a restriction on this digital currency. Moreover, the Indian government under an awaited bill is prepared to move through with its aim to put ban on cryptocurrency. The prohibition is said to be applied to all private cryptocurrencies including bitcoin.
Cryptocurrency focused bill
The bill of the regulation of the official digital currency includes part of the ban. The proposed legislation aims to provide a conducive environment for the formation of the virtual currency that could be issued by the RBI (Reserve Bank of India). In 2019, a law was introduced called “the banning of cryptocurrency and regulation of official digital currency.”
The name is now changed to “Cryptocurrency and Regulation of Official Digital Currency Bill, 2021”. According to the Indian government, cryptocurrencies can be regulated as an asset rather than a currency along with taxing gains is in talks. Moreover, cryptocurrencies will not be accepted as a form of payment.
On the other hand, some of the sources such as CNN news18 stated that a certain regulatory action will be taken by the Indian government instead of the ban on cryptocurrency. This includes trading through government-recognized platforms would be permitted. In addition, the SEBI or the securities and exchange board of India will be needed to keep track of the trading, since it involves global transactions. However, the regulations are yet to be confirmed.
Crypto Market impact
Following the bill’s release, the value of numerous digital currencies is said to have fallen. Bitcoin and Dogecoin sank by more than 12 and 14% respectively in one of the Indian exchange sites. The crypt trader’s author states, that the impact of this regulation is quite limited.
For example, when China declared cryptocurrency an issue and chose to prohibit its use, the markets were not affected to the same level, but were permitted to operate with some limitations. The Indian government is anticipated to follow similar actions that would allow individuals to utilize cryptocurrencies under specific situations.
What happens if Indian government puts a ban on cryptocurrency?
There are a large number of people, estimated at around a 14-15million- have made investments in cryptocurrencies in the present year. It is currently expanding at a steady rate, with a large proportion of participants hailing from India’s tier 2 and tier 3 locations.Today cryptocurrencies are much more than just speculative digital money. They can be a great source to diversify the investors’ portfolio and putting a ban on cryptocurrency can undoubtedly be a major blow to the economy of the country.
The Indian government is concerned about the savings of the people might face a loss that would end up affecting the economy. The reason for this is that cryptocurrencies tend to fluctuate drastically and may be susceptible to manipulation. However, there is still a chance that the government will enact legislation allowing crypto transactions to be executed. As a result, investors still have a chance.