{"id":7439,"date":"2021-05-22T12:26:31","date_gmt":"2021-05-22T12:26:31","guid":{"rendered":"https:\/\/www.buyucoin.com\/crypto-labs\/?p=7439"},"modified":"2021-05-22T12:31:50","modified_gmt":"2021-05-22T12:31:50","slug":"cryptocurrency-regulation","status":"publish","type":"post","link":"https:\/\/www.buyucoin.com\/crypto-labs\/cryptocurrency-regulation\/","title":{"rendered":"These are the top 4 reasons why the Government of India should not delay cryptocurrency regulation"},"content":{"rendered":"\n
cryptocurrency regulation<\/h3>\n\n\n\n
Cryptocurrencies, since they have no underlying asset, are extremely risky for investors. According to data from cryptocurrency exchanges, around 1.5 crore Indians have invested in cryptocurrencies, with a total value of Rs 15,000 crore. There are 350 blockchain and cryptocurrency startups.<\/p>\n\n\n\n
While the RBI is explicitly opposed to cryptocurrency as a medium of exchange, the government’s position on the subject is unclear. Experts believe that Indians investing in cryptocurrencies are taking a high-risk bet because the Reserve Bank of India (RBI) and the government have yet to regulate these instruments. Any kind of crypto transaction should be banned in India before cryptocurrency regulations provide clarification, they said. \u201cBe it as a medium of exchange, mode of investment\/ assets, cryptocurrency dealings should be banned in India and should be made as a criminal offense,\u201d said Madan Sabnavis, chief economist of the CARE rating agency.<\/p>\n\n\n\n
\u201cUnless we have regulations and an official view on this, Crypto is no different from gambling,\u201d said the veteran economist. The remark is significant at a time when crypto currencies are becoming increasingly popular among investors.<\/p>\n\n\n\n
Cryptocurrency is a type of digital money that is decentralized and based on blockchain technology. While Bitcoin and Ethereum are the most well-known cryptocurrencies, there are thousands of others in circulation. These are the following Cryptocurrency regulation. <\/p>\n\n\n\n
Crypto rush<\/strong><\/h3>\n\n\n\n
Despite the fact that the Reserve Bank of India (RBI) and the government are yet to form an opinion on crypto currencies, many Indians have invested in the industry. According to data from cryptocurrency exchanges, around 1.5 crore Indians have invested in cryptocurrencies, with a total value of Rs 15,000 crore. <\/p>\n\n\n\n
There are 350 blockchain and cryptocurrency startups. BuyUcoin and other crypto exchanges have seen a surge in consumer interest, and crypto exchanges are aggressively advertising investment opportunities. The Reserve Bank of India has already expressed concern about cryptocurrencies. The RBI Governor, Shaktikanta Das, said at the 7th India Economic Conclave on March 25 that the central bank has raised some big concerns with the government regarding cryptocurrencies. “Both RBI and the government are committed to financial stability. We have flagged some major concerns to the government on cryptocurrencies. The government will come out with a decision sooner than later,” Das had said.<\/p>\n\n\n\n
Regulatory action<\/strong><\/h3>\n\n\n\n
The Reserve Bank of India (RBI) barred all banks from trading in cryptocurrencies in 2018, but this prohibition was lifted by the Supreme Court in response to a petition filed by the Internet and Mobile Association of India (IMAI). Although the RBI has the authority to regulate virtual currencies, the court stated that in the absence of legislation, the business of dealing in these currencies should be regarded as a legitimate trade covered by Article 19(1)(g) of the Constitution’s fundamental right to carry on any profession, trade, or business. <\/p>\n\n\n\n
While the RBI is explicitly opposed to cryptocurrency as a medium of exchange, the government’s position on the subject is unclear. The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, has been drafted by the government as a bill to regulate cryptocurrencies. Any cryptocurrency transactions will be illegal under the bill’s provisions. However, there is currently no indication of when this Bill will be presented in Parliament.\u00a0<\/p>\n\n\n\n
Why should people invest in cryptocurrency?<\/strong><\/h3>\n\n\n\n
In the current economic climate, where real interest rates have turned negative, there aren’t many appealing investment choices. Bank deposits have become unattractive to investors as interest rates have fallen sharply. Similarly, high uncertainty and a bleak economic climate have made real estate, equity, and mutual fund investments unappealing to HNIs, leading many to consider crypto bets and cryptocurrency regulation are good. <\/p>\n\n\n\n
Due to a mix of factors such as the COVID-19 crisis, the poor rate of returns on banking investments, cryptocurrency stands to gain in popularity as it is being seen with the potential to become a good investment alternative, like gold or real estate if certain provisions are met, said Jaya Vaidhyanathan, CEO of BCT Digital.<\/p>\n\n\n\n
\u201cThis is still far away, but it can happen over a period of time. We are going to see lack of trust from authorities till it is fully evaluated. Although Bitcoin has been seen with caution and distrust by authorities, its underlying technology, Blockchain, has a lot of advantages in today\u2019s digital banking context as well,\u201c Vaidhyanathan said.<\/p>\n\n\n\n
What happens if cryptocurrency is banned in India?<\/strong><\/h3>\n\n\n\n
Lack of clarity on cryptocurrency regulation would mean that crypto investors may be facing high risk if the government decides against cryptocurrencies in India. Those holding crypto assets may face a sudden shocker if India decides to ban the cryptocurrency assets tomorrow, experts said.<\/p>\n\n\n\n
\u201cThere is no underlying to the crypto currencies, so it is highly risky for anyone to use it as asset. You can\u2019t certainly treat it as a mode of exchange. With high volatility seen in recent days, it is quite clear this is a speculative asset,\u201d said Ashvin Parekh of Ashvin Parekh Advisory services.<\/p>\n\n\n\n
\u201cAlso, there is a possibility of illegal elements using crypto for money laundering activities,\u201d said Parekh. While big investors like Tesla founder Elon Musk can afford speculating in such assets, common investors may be facing high risk, Parekh added.<\/p>\n\n\n\n
Banks have been wary of cryptocurrencies as a result of the RBI’s lack of clarity.<\/p>\n\n\n\n
\u201cCentral banks advocate the centralization of an economy and its banking system. Bitcoin or most cryptocurrencies, for that matter, are the opposite of that. They are not controlled by a country\u2019s regulators or even governed by them,\u201d said Vaidhyanathan of BCT Digital.<\/p>\n\n\n\n
\u201cUnder such circumstances, it\u2019s natural for regulators to be suspicious of them, leading to trading bans or tightened regulations. In 2018, a lot of Indians were trading in cryptocurrencies, convinced of its benefits. But soon, this was questioned and outlawed,\u201d Vaidhyanathan said.<\/p>\n\n\n\n
A senior banker, who didn\u2019t want to be named, said banks are staying away from crypto transactions since the RBI hasn\u2019t clarified its position officially. \u201cFor us, the RBI is the apex authority. Till the time, the RBI doesn\u2019t clarify its position, we will not touch this segment,\u201d said the banker.<\/p>\n\n\n\n
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