Digital Currency in India: The government revealed in its budget session that it plans to introduce a new bill on cryptocurrencies, namely the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, which will ban all private cryptocurrencies such as bitcoin and put in place a framework for an official digital currency to be issued by the Reserve Bank of India, according to a legislative agenda listed by the government. Finance Minister Nirmala Sitharaman said in the Rajya Sabha on February 9 that a high-level Inter-Ministerial Committee constituted under the Chairmanship of Secretary (Economic Affairs) will study the issues related to virtual currencies. (Also Read: Government Proposes To Launch Official Digital Currency )
Meanwhile, Minister of State for Finance Anurag Thakur also stated earlier that the government would bring a bill on cryptocurrencies as the existing laws are inadequate to deal with the issues concerning cryptocurrencies. The central bank has clarified that it is working on a digital version of the rupee, and results were expected soon. A summary of the bill said that it seeks to ‘create a facilitative framework for the creation of the digital currency to be issued by the Reserve Bank of India’. (Also Read: Bitcoin Stays Above $50,000 As MicroStrategy Seeks $600 Million To Buy More )
However, the world’s largest and most popular cryptocurrency has witnessed a meteoric rise in the year 2020 and has outperformed this year, gaining almost 74 per cent, especially after billionaire Elon Musk announced a $1.5 billion investment by Tesla Inc. Apart from this, a number of other reasons have contributed to bitcoin’s surging price resulting in a broader bull run. Sustained interest from major corporates such as PayPal, MicroStrategy, BNY Mellon, Mastercard has proven to be a huge stride in mainstream acceptance for bitcoin. Big and small investors are not drawn towards its hedge against inflation and potential for quick gains. (Also Read: Bitcoin Crosses $50,000 In Historic Win, Gains Further Mainstream Acceptance: 10 Points )
Amid this global phenomenon and considering that the government is planning to ban all private virtual currencies and proposes to bring an official digital currency, what is the status of cryptocurrencies in India? How will the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 impact investors?
Cryptocurrency and Regulation of Official Digital Currency Bill, 2021: Here’s what experts say –
“Overall, banning crypto will not be a win for anybody. And I trust even the government understand that very well. A harsh step like that might cost a huge loss of investment to the country, considering crypto startups in India have raised over $ 50 mn from foreign investors despite the hostile situation in India for the crypto. Also, in terms of security, not announcing regulations might give rise to the black market. People might still trade but it will become difficult within the country to track, said Kumar Gaurav- Founder and CEO, Cashaa- blockchain-based fintech.
”On the contrary, announcing a regulatory framework will allow the government to keep a close watch and let the industry thrive in accordance with the guidelines. It is known that it took the country’s startups years to come closer to the counter-parts in developed countries, and only a handful of companies could paint a larger-than-life picture. Depriving the country of the technology and opportunity which is being created by crypto is not very different from depriving someone of the internet,” he added.
”With credible and major institutions like Tesla, MasterCard, Paypal, Microstrategy adopting them into their ecosystem we are witnessing a continuous rise in demand for bitcoin, thus pushing the valuation higher. In addition, companies such as Google Pay, and Samsung Pay too are now contemplating making inroads into cryptocurrency via Bitpay. We expect the trends to continue in form of investments in these digital assets with the induction of newer products build around Bitcoin,” said Sumit Gupta, CEO and Co-Founder, CoinDCX.