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INDIA’S PLAN TO BAN CRYPTOCURRENCY-THE CURRENCY OF THE FUTURE

Cryptocurrency in simple words is digital or virtual money whose transactions are maintained by highly specialized methods of cryptography. Although, they are used for various transactions and exchanges, this currency is not in control of any one person or a political force.

Ever since the Coronavirus pandemic hit the world, a lot of monetary transactions took place online. This led to a surging rise in the values of these currencies, with people investing millions of rupees in it. Some of the world’s famous cryptocurrencies include Bitcoin, Ethereum, Ripple, which have seen a great rise in the number of their investors. The world’s richest person Elon Musk has been one of the prime investors with his company Tesla investing a mammoth $1.5 billion in Bitcoin. His investment has led to Bitcoin’s value crossing $50,000 for the very first time since years. The world is also aware of how Musk’s single tweet helped a currency called Dogecoin witness a surge in its value. Twitter CEO Jack Dorsey and rapper Jay Z have together developed an endowment fund to back bitcoin development.

The Union Budget of 2021 put forth by Finance Minister Nirmala Sitharaman saw its fair share of applause and criticisms. However, the nation is expecting a probable bill that is going to be proposed regarding the ban of usage of cryptocurrency in day to day transactions. The ‘Cryptocurrency and Regulation of Official Digital Currency Bill’ aims to ban and prohibit all private cryptocurrencies in India with certain exceptions to promote the underlying technology and its uses. However, the prime motive to eradicate the interference of the private currencies is because the nation is planning to create and develop an official digital currency of the country which will be issued by the Reserve Bank of India and will be regulated by the same.

India’s plan to develop an official digital currency has a motive of centralizing and regulating all transactions. However since most cryptocurrencies are privatized and have no intervention of the government or any statutory board as they are neither assets nor national currency, this creates doubts in the minds of investors. The currency’s volatile nature and non regulation by any administrative authority, due to which transactional record is only present with the private investors, have been some of the supporting reasons for the ban of the currency. Crypto transactions were temporarily banned by the monetary policy of India in 2018 before the overturning of the policy that happened last year in March. India has a total trading value at more than $1 billion in cryptocurrency. There are almost 75 lac cryptocurrency owners. After the bill is passed the existing owners will have no choice but to declare and dispose of their holdings within a certain notified period of time, failing which can result in penalising and imprisonment.
Following the news of the ban, came a surging trend on Twitter with Indian millennials using #IndiaWantsCrypto to show their solidarity toward crypto trading. Several Indian crypto trading companies have joined in the campaign to spread awareness and importance of the digital currency.

Seeing the rise of Bitcoins and several other currencies, the world’s largest business conglomerates have decided to use and make new developments in digital currency. MasterCard has put forth a decision supporting cryptocurrency on its network, whereas Amazon has plans to develop a new digital currency of its own. Will the new bill that bans the trading of one of the fastest-growing digital currency in the world, lead to a downfall in the recently recovering economy of India, or will the official cryptocurrency of the RBI open up the doors to new horizons in the financial sphere of the country?

Literary Sources: Economic Times, The Hindu, Business Standard, CNBC, News18, Money Control.

Written by -Hetvi Mehta