Cryptocurrency crash: All You Need to Know why Cryptocurrency Crash, What Happen to Cryptocurrency in India, Cryptocurrency Future in India, Cryptocurrency New Law in India.
This week’s cryptocurrency crash isn’t being driven by a single factor, but rather by a multitude of factors including “rising selling pressure, end of year profit-taking, as well as speculation”.
Compared to rupees, Bitcoin fell 17 percent, Ethereum 14 percent, Dogecoin over 20 percent, and Polkadot 14 percent. WazirX data showed that even the dollar-pegged token Tether had fallen nearly 17 percent.
In a government bulletin earlier this year, it was reported that the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 seeks to prohibit all private cryptocurrencies in India. There are some exceptions, however, to promote the underlying technology of cryptocurrency and its uses.
The Cryptocurrency and Regulation of Official Digital Currency Bill 2021
In the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, “private cryptocurrencies will be prohibited in India, but certain exceptions will be made to promote the technology and its uses”.
In addition, the bill seeks “to create a facilitative framework for the creation of the Reserve Bank of India’s official digital currency”.
The Lok Sabha bulletin did not provide any other details about the proposed legislation.
Why Need the Bill?
Concerns have been raised that cryptocurrency is being used to mislead investors and to fund activities. In addition, cryptocurrency is not issued by a central bank or has a sovereign backing, making it difficult to trace and record.
Several crypto-exchange platforms have reported that around two crores Indians have invested in cryptocurrencies, according to a recent report.
During the last budget, the government planned to introduce legislation banning all cryptocurrencies. However, the bill was scrapped. Shantikanta Das, the governor of the Reserve Bank of India, has also raised concerns about cryptocurrencies. As Das stated in an event held in early November, “Cryptocurrencies pose serious macroeconomic and financial stability concerns to the RBI.” The government is actively looking at the issue and will decide on it. We have flagged this issue multiple times as a central banker, but we have serious concerns about it.”
Legal tender in other countries
On 9 June 2021, El Salvador became the first country to officially classify Bitcoin as a legal currency.
Salvadoran President Nayib Bukele said the move would make it easier for his countrymen abroad to send money home.
Panama is also considering following in El Salvador’s shoes.
But, as of now, El Salvador is the only country to officially recognize the cryptocurrency.
In many other countries, like the United States, Canada, trading in these virtual currencies is allowed.
What may happen in the future
Transferring cryptocurrencies from one wallet to another is similar to sharing files from one computer to another, so a regulatory ban may not prevent people from sending cryptocurrencies to each other. However, it could complicate the process.
HOW IS CRYPTOCURRENCY TRADE POSSIBLE IN INDIA?
Union finance ministry gave the following answer to a question in Parliament regarding whether bitcoin trading was banned in the country: RBI circular of April 2018. The RBI circular “advised all entities under its aegis not to deal in” virtual currencies. However, it had noted that the Supreme Court had in a 2020 judgment set aside the RBI circular That has meant that Indian investors have been able to trade in cryptocurrency.
According to reports, several public and private banks continued to discourage their customers from dealing in cryptocurrencies despite the apex court’s order. Last month, the central bank clarified that banks cannot use that circular as an excuse to deny services related to cryptocurrency transactions.
As per the order of the Hon’ble Supreme Court, the RBI circular is no longer valid as of the date of the Supreme Court judgment, and therefore it cannot be cited or quoted.