We told you in the first part of Complete ABCD of Cryptocurrency. Our expert told how it can be bought, who made it and where we can use it. In the second episode of the series, we will talk about its legal aspect. Our experts Gaurav Garg and Kshitij Purohit tell us about the legal aspect of cryptocurrencies.
What is cryptocurrency?
Cryptocurrency is a type of virtual currency. It is also called digital currency. Bitcoin is a cryptocurrency. You cannot touch it, but you can keep it. That is, it is a digital form of currency. It is not in your pocket in a solid form like a coin or note. It is completely online. It can also be placed in virtual space. Although it is not legal in India yet. The government has not approved such a currency.
Cryptocurrency is not legal in India, why so?
Although many countries have legalized Cryptocurrency, the stand of the government in India is not clear. The government is considering regulating it. At the same time, it is completely banned in many countries. Gaurav Garg, Head of Research, Capital Via Global Research Limited, explains that Satoshi Nakatoshi came up with the concept of cryptocurrency to overcome the recession of 2008. To get out of the recession, companies gave loans, but its processing used to take 10 percent. Only 90 percent of the amount could reach the borrower. In view of all these shortcomings, cryptocurrency was born. In which there is no processing fee of any kind. Anyone can transact through it from anywhere. Gaurav says that it is a bit difficult to regulate it.
What is the government's opinion on the recommendation of the Subhash Garg Committee?
The Central Government had formed an expert committee under the chairmanship of former Finance Secretary Subhash Garg regarding cryptocurrencies. The committee had proposed a complete ban on cryptocurrencies in its recommendations in 2019. Now the government believes that the recommendations of the committee headed by Subhash Garg have become obsolete. Instead of a complete ban on cryptocurrencies, now there is a need to make new rules. The new committee will explore the possibility of increasing the technology of blockchain used in cryptocurrencies. The committee can also make suggestions to regulate crypto as a digital asset instead of a currency.
What did RBI say?
Kshitij told that in March this year, RBI Governor Shaktikanta Das said during an event that the central bank (RBI) has many concerns about cryptocurrency. Das said, “Both the RBI and the government are committed to financial stability. We have informed the government about some major concerns regarding cryptocurrencies. The government will take a decision on this soon.
What is the government doing?
The RBI is clearly not in favor of legalizing cryptocurrencies as a medium of transaction. The government has not yet clarified its stand. To regulate cryptocurrencies, the government has proposed to introduce a bill named 'Cryptocurrency and Regulation of Official Digital Currency Bill, 2021'. According to media reports, there is a provision to make illegal any work related to cryptocurrency in this bill. But it is not yet clear when it will be introduced in Parliament. However, in view of the increasing popularity of Bitcoin, the government's stance has also softened.
What's the problem with regulating?
In response to this question, Gaurav explains that since there is no agency in any way in cryptocurrencies, there is no arbitration. In such a situation, it is a little difficult to regulate it. Yes, even if it is regulated, it is even more difficult to bring it under the legal framework. The reason behind this is that this currency cannot be tracked. If there is no boundation, then not only the government but the whole world will need a global body like WTO, WHO to regulate it. Because it is not like the stock market, where investors have to give information to trade. This is open market.
Can a person from India buy crypto from here?
Yes, very easy. Because it does not require any kind of paperwork. Everything is online. If the whole market is open, then anyone can buy this currency anywhere. Yes, but some banks do not allow the business of buying cryptocurrencies in exchange for money at present, because it is not fully regulated in India.
What does it mean for the government to create its own cryptocurrency?
Last month, the RBI and the Finance Ministry have said that they will consider making laws for India's own digital currency and its regulation. But bringing India's own digital currency is easy. The government will only have to give the status of a legal tender to any type of transaction, which can be used by the people of India. Union Finance Minister Nirmala Sitharaman has made it clear that the government does not plan to ban cryptocurrency completely. In fact, the government wants to protect the blockchain technology based on cryptocurrency. Experts say that issuing digital legal tender is challenging.
Illegal use of cryptocurrencies, how true?
In response, Gaurav says that every coin has two sides. Legal and illegal happens in every business, but it is less so in cryptocurrencies. But it cannot be denied either. Since crypto is based on blockchain, it has 50 percent right people. 20-25 per cent will be in it with bad intentions. But as people increase, there will be manipulation, then fraud use will also decrease. There are 80 lakh investors in India. 10 thousand crores is the amount of investment.
Why is it being used in cybercrime?
Its biggest disadvantage is that it is a virtual currency and this makes it a risky deal. There is also a fear of this currency being used for illegal purposes such as supply of drugs and illegal trade in arms. There is always a risk of cyber attack on it. It is a virtual currency, so illegal business can be done through it. People want to avoid the government. It can be hacked. Stolen debit, credit cards can be bought, they can be used to promote terrorist activities. That's why the government wants to regulate it.
What is the status of cryptocurrencies in which countries?
Gaurav says that mining of cryptocurrency is banned in countries like China and Thailand. When China imposed the ban, the rates of bitcoin fell sharply. After that it has now been banned in Thailand as well. The Thai Securities and Exchange Commission (SEC) has banned cryptocurrencies and non-fungible tokens (NFTs) amid concerns about excessive betting. The biggest work is happening in Russia. To manage cryptocurrencies, there are 50-50 sq ft warehouses where cryptocurrency business is being managed from supercomputers.
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