×

UPSC Courses

DNA banner

DAILY NEWS ANALYSIS

  • 12 February, 2021

  • 5 Min Read

Cryptocurrency

Cryptocurrency

Context

  • The government intends to bring in a law on cryptocurrencies to put an end to the existing ambiguity over the legality of these currencies in India.
  • The government has, suggested that it does not consider them to be legal tender.

What is Bitcoin?

  • Bitcoin is a type of digital currency that enables instant payments to anyone.
  • Bitcoin was introduced in 2009.
  • Bitcoin is based on an open-source protocol and is not issued by any central authority.
  • Bitcoin is a peer-to-peer currency.
  • Bitcoin is the first decentralised digital currency.

Disadvantages

  • Such currencies are:
    • highly volatile,
    • used for illicit Internet transactions, and
    • wholly outside the ambit of the state — into any sort of regulation.

RBIs direction

  • In 2018, the RBI did send a circular to banks directing them not to provide services for those trading in cryptocurrencies.
  • Regulatory bodies like RBI and Sebi etc also don’t have a legal framework to directly regulate cryptocurrencies as they are neither currencies nor assets or securities or commodities issued by an identifiable user.

Supreme Court’s judgement

  • But this was eventually set aside by the Supreme Court, which found the circular to be “disproportionate,” given that the central bank had consistently maintained that virtual currencies were not banned in India.
  • Also, the RBI could not show that entities that it regulated were adversely impacted by exchanges dealing in virtual currencies.

So, what will the Bill seek to do?

  • Cryptocurrency exchanges, which have sprung up, are reportedly lobbying with the government to make sure these currencies are regulated rather than banned outright.
  • Smart regulation is preferable, as a ban on something that is based on a technology of distributed ledger cannot be implemented for all practical purposes.

Findings of India inter-ministerial committee

  • Even in China, where cryptocurrencies have been banned and the Internet is controlled, trading in cryptocurrencies has been low but not non-existent, as an India inter-ministerial committee found out.
  • Despite this and the fact that most countries it studied had opted for regulation, this committee still went ahead to recommend an outright ban.
  • Of course, it encouragingly also batted for an official digital currency as well as for the promotion of the underlying blockchain technology.

Conclusion

  • The government must resist the idea of a ban and push for smart regulation.

Click here for further reading

Source: TH


THE ABSURDITY OF THE ANTI-DEFECTION LAW

THE ABSURDITY OF THE ANTI-DEFECTION LAW Uddhav Thackeray’s government facing internal dissent from a block of 22 MLA led by Eknath Shinde, has brought the anti-defection law again into the spotlight. Such events were also witnessed in Puducherry, Madhya Pradesh, and Karnataka. ANTI-DEFECTION LAW The anti-defection law was included in

12TH WTO MINISTERIAL CONFERENCE

12TH WTO MINISTERIAL CONFERENCE The 12th Ministerial Conference of the World Trade Organization (WTO) concluded, recently in Geneva. The main areas of discussion were: WTO’s response to the pandemic.  Fisheries subsidies negotiations. Agriculture issues including Public Stockholding for Food Security. WTO Reforms and M

Bangladesh’s Rohingya Problem

Bangladesh’s Rohingya Problem What is the issue? The population of Rohingyas in Bangladesh as of now is 8,85,000 and the refugee population is increasing rapidly by 35,000 every year, which is a serious security implication for countries mainly in South Asia. What is the Rohingya issue? Rohingya are an

FINANCIAL ACTION TASK FORCE

FINANCIAL ACTION TASK FORCE  Pakistan got a respite from the Financial Action Task Force (FATF) as FATF announced that the country could be removed from the grey list. FATF is going to decide whether to take Pakistan off the ‘grey’ list at the end of its plenary session in Berlin in October. Pakistan has been on the Financia

The Situation of Government Jobs

The Situation of Government Jobs PM has ordered, million central government posts to be filled in a mission mode over the next one and a half years.  The Current Picture of Employment in India  The unemployment rate is defined as the percentage of unemployed persons in the labor force. Suffered by demonetization, pandemic,

Toppers

Search By Date

Newsletter Subscription
SMS Alerts