‘Cryptocurrency in Indian Scenario’
Currency is the most specific use of word, referring to money in any form which facilitates as
a medium of exchange. A currency subsists in many forms. With the growth of digital currency
market, the introduction of cryptocurrency has become a global phenomenon.
A cryptocurrency is a digital currency created and stored in block chains. It uses encryption
techniques for security and anti-counterfeiting measures. The first decentralised
cryptocurrency was launched in 2009 by Satoshi Nakamoto, pseudonymous developer of
‘Bitcoin’ who in his announcement said that he developed “A peer to peer electronic cash
system.” What makes cryptocurrency different altogether is its supply which is not determined
by any central bank or authority and the network is completely decentralised.
The legitimacy of cryptocurrency varies from country to country across the globe. For instance,
China Central Bank has banned handling of Bitcoin by financial institutions in China whereas,
in Russia though cryptocurrency are legal but purchasing any goods with currency other than
Russian Ruble is illegal. As far as India is concerned the Government has fallen short of a
definite stand on the legitimacy of use of cryptocurrency. The cryptocurrency is neither legal
nor illegal in India, the Government and the banking regulators have cautioned investors to
stay away from them. The RBI has released several statements since 2013 calling Bitcoin and
other cryptocurrencies a Ponzi scheme as well as a bubble.
India’s cryptocurrency trading volumes have been on the rise. There are at least five million
active traders in India, transacting via regulated banking channels. As of now, the
cryptocurrency exchanges are not governed by either SEBI or RBI. So the gains made in these
exchanges are also illegal. It is therefore not possible to set off losses made in these exchanges
against capital gains or other speculative income. There were also reports of some banks in
India recently disallowing transfer of funds to trading account of cryptocurrency exchanges.
The three-judge bench of the Supreme Court of India has issued notice to sought the response
of the Centre and the Reserve Bank of India (RBI) on a Public Interest Litigation to regulate
the flow of Bitcoin (crypto money) and to ensure that same be made accountable to exchequer.
The cryptocurrency found a mention in the National Finance Budget where Finance Minister,
Mr. Arun Jaitley while presenting the Union Budget 2018 stated that the country does not
recognize Bitcoin as legal tender and Indian Government will take all measures to eliminate
the use of crypto-assets trading in India in financing illegitimate activities. The statement has
created doubts in India’s crypto-community.
The Government has also appointed an Inter-Disciplinary Committee on cryptocurrencies
comprising nine members including representatives of RBI, SBI, NITI Aayog and Department
of Financial Services to examine the existing framework on cryptocurrencies in India and to
come out with measures for dealing with such virtual currencies relating to consumer
protection, money laundering etc.
The cryptocurrency is a highly experimental digital asset which is not immune to crimes like
hacking and money laundering. In Bitcoin’s short history, the company has been subjected to
over 40 thefts, including a few that exceeds $1 million in value. In the absence of any
regulations to regulate and govern the transactions related to cryptocurrencies, the fate of the
investors and speculators lies in the policy making of the Government.
References:
1. https://www.forbes.com/sites/sindhujabalaji/2018/02/06/india-is-not-banning-
cryptocurrency-heres-what-it-is-doing-instead/amp/
2. Jose Tojo, CRYPTOCURRENCY REGULATION IN INDIA, January 07, 2018,
Available at: https://www.indianeconomy.net/splclassroom/cryptocurrency-
regulation-in-india/
