The tussle regarding cryptos is nothing new in India. In 2018, several regulated substances were prohibited by the Reserve Bank of India from offering services to any business or individual that involves digital currencies.
But the good news is that, in 2020’s March, the Supreme Court overturned the world and stated that there would not be any such ban on the exchanges, traders, or businesses on cryptocurrencies. We will dive into the details in this article straight away.
The government of India is deciding on bringing a new law banning trade in the technology of cryptocurrency development. And it will thrash the industry that was forming at the lockdown.
India thus decides to introduce the law to ban trading in the cryptocurrency launch. This will place India out of the steps with several other economies selected for regulating the young market.
According to some people who are associated with this, it is unexpected that the bill will be easily discussed via the federal body. Blockchain technology will be encouraged by the federal government. However, according to several people, the government is uninterested in the trading of cryptos. The spokesman of the finance ministry in India has not responded to the messages and calls made.
According to the technical research, about a 45% surge within trading is prompted by the court in just two to three months from March. Many of the Indians are risking savings, suffering job losses, and the COVID-19 is slowing down the economy.
The marketplace of Bitcoin and cryptocurrency has reported that it has encountered a growth of 883% from January 2020 to May 2020, around $2.2 million to $22.1 million. Besides, a cryptocurrency app development company based in Mumbai encountered a 400% growth in March 2020 and a growth of 270% in April 2020.
Businesses worth millions of dollars are conducted every week, and the lockdown is pushing the volume up. The government-industry stated that they are losing significant revenue due to the lack of a regulatory mechanism.
Refunds in digital currencies have been found by the increasing number of investors because the traditional assets were at risk, and the worries about the economy triggered the problem.
India’s decision will become more significant as many Asian nations will be weighing the advantages and disadvantages of these virtual currencies. Virtual currencies and ICO or Initial Coin Offerings were banned by China in 2017.
However, China allowed the trading of bitcoin as a virtual property and not as money. The nation is planning to build a central bank that can facilitate digital currency. Cryptocurrency traders are regulated by both South Korea and Singapore.
The federal government of India thinks that the blockchains’ possible uses are being explored and how it can store blocks or records of transactions in multiple networked databases, and how it can manage drug supply chain, land records, and keep educational certificates’ records. And when virtual currency is being planned, the Indian government is averse to the idea of trading cryptos.
About 1.7 million Indians who are trading in digital assets, along with other cryptocurrency services providers that are setting up this platform for the particular trade, will be highly affected by the ban.
Effect on banking systems:
The ban will also hurt the management of the digital currency and banking system of the nation. All the players are expecting that the government will not put a full-scale ban on all the trading currencies.
Crypto is a digital asset that is developed and designed for functioning as the exchange’s medium. Crypto coin development makes use of powerful cryptography for securing financial institutions, controlling the additional units’ creation, and verifying the assets’ transfer.
The decentralized control is being used by the cryptos as opposed to the central systems of banking and centralized digital currency. The crypto network is not controlled by any single institution. And because of the reason that a big bank will not have control over their money, few people are at ease.
However, the RBI, for protecting the country’s assets, has banned the trading of crypto exchanges virtually in India via its circular that was introduced in 2018. It stated that all the entities that are regulated by it must not be dealing with any virtual currencies or offer services to facilitate any entity or person in settling or dealing with those.
The approach of RBI is ham-handed, and they have a fear of the unknown. As the conventional currencies are backed by silver or gold, digital currencies are formulated in mathematics, and the same goes for the process of crypto wallet development.
Several European institutions say that the users of bitcoin are unprotected by chargebacks or refund rights. And the same goes for the Indian users as well.
The unbanked population of India is significant, and blockchain holds the capability for increasing financial inclusions in the nation by making digital assets accessible. The policymakers of India will lead the path for offering proper regulatory guidance for mitigating and managing such risks, which will help Indian entrepreneurs, businesses, consumers, and innovators.