Why Crypto-currencies are banned in most of the countries, have you ever wondered?
Humour in the Crypto-currency market between Crypto-currency and currency
Currency-Hey,I cannot see you and the word is it that you are more powerful?
Crypto-currency- I am your digital version,Once the Crypto-currency market grows you will see my power.
Currency(laughing loudly)-Really, check your facts.You are banned in most of the countries.
Crypto-currency- Let’s see in future.
History of Crypto-Currency Market
Crypto- Currency market was started by the group or individual known as Santoshi Nakamoto. In 2008 during the global financial crisis a white paper called Bitcoin-A Peer to Peer Electronic Cash System was released.It was made for people to control their money themselves.Bitcoin came into existence in the Crypto-currency market since 2009.
In 2010, an owner of 10000 Bitcoins first time traded it for two pizzas which if he still had the value would be more than $100 million.
Increase in popularity of Crypto-Currency Markethttps://www.google.com/url?q=https://en.wikipedia.org/wiki/Bitcoin&sa=D&ust=1595597100621000&usg=AFQjCNG2BGuRER87KrlH-LcpI2TSJw49bg
Crypto-Currency market has been growing day by day in great demands. To purchase cryptocurrency a digital account has to be opened. Bitcoin is the most commonly form of Crypto-currency used.The price of Bitcoin did not change for a certain number of years then it reached to $20,000 per Bitcoin in 2017 and $7,000 in April 2020 as per data given by Investopedia.
# It is a replacement of paper money , a digital form of currency. The most convenient way of trading in different parts of the world.As most financial institutions block transactions overseas.But today due to Crypto- Currency market it is no problem.
# Crypto-Currency market is based on blockchain technology. That means a ledger is available for everyone to see.So it is a transparent and a clear procedure as there is no involvement of government or banks in it.It works on a single network called mining.
# It works on a software so there is no need to take permission from anybody to trade in it..
# It works at a lightening speed, it can conduct seven transactions per second at its optimum level.
# There is no chance of cheating as all transactions aware done yourself with no middle men.
# In recent years, the idea of Universal Base Income to provide a stable income by replacing the current situation of unemployment and tax spending. Successful businessmen like Mark Zuckerberg, Elon Musk and Virgin Atlantic are in favour of this.
Even after so many advantages, Why is Crypto-Currency is still banned from so many countries?
The countries which consider dealing in Crypto-Currency market as illegal are
- Saudi Arabia
- These countries have completely banned Bitcoin and Crypto-Currency to be used in there countries as money or trading in it as goods and service.In some of the countries there are legal actions taken in case of use of Bitcoin or any other Crypto-Currency
- Check out -Henry Harvin’s Bitcoin course
Disadvantages of Crypto-Currency
Let’s observe the reasons why are some countries not comfortable in dealing with Crypto-Currency Market?
- Bitcoin and other Crypto-Currencies are considered outlaws in some of the countries as the Government and the financial institutions are not able to control or regulate them. So, it scares them.
- Crypto-Currency Market attracts Criminals and people interested in tax evasion and money laundering. It had become the latest trend in Dark Web Market, Silk Road when they were online. But if a person wants to cheat then they will find different means as tax evasion has always been a problem with or without Crypto-Currency.
- Easy mode of transfer in Cyber- terrorism, the most famous case was of WannaCry and Petya viruses in which $300 was paid in Bitcoin to decrypt files.
- Big risks are there in Investing as huge investments are involved.
- The Crypto-Currency market stands as a threat to our traditional banking institutions which is a fact being recognised by most governments. As there is no single authority regulating the value of Crypto-Currency unlike our ages old system of Banks. Crypto-Currency works on the system of decentralisation. It is a big change for Banks as in some places ATMs are also there for the exchange of their regular currency to Bitcoins. So transactions are being performed outside our regular structure of banking and can be done by anybody who earlier did not have an access to the bank too.
As quoted by UK Banking Report on Crypto-Currency Market
“ Bitcoin users can handle many of their daily payments needs themselves, without the need for interaction with banks, and avoiding the need to incur bank fees.In the same way, the value stored in PayPal accounts moves outside of the bank’s payment systems, depriving banks of valuable payments revenue.”
In some of the countries trading in the Crypto-Currency market is restricted and not completely banned. Here, banks and financial institutes do not provide financial services in regard to Crypto-Currency.
- No Crypto exchanges are made here.
- Banks do not provide any financial services for Crypto-Currencies
- Although these bans exist these countries do not completely stop trading them.
- People make use of sites like Local Bitcoins, Paxful or Bisq as indicated by the trading volumes on these platforms.
- It is not possible for governments to truly ban Bitcoin.
Is Crypto-Currency ban in India?
As mentioned earlier to hold Crypto-Currency in India is not illegal. Rather statistics state that it was the most searched term on Goggle by Indians.https://trends.google.com/trends/yis/2017/IN/
But there is no availability of Crypto exchanges in India which is hampering its increase in India.
Reserve Bank of India had issued a press release dated 24 December 2013 regarding Virtual Currencies as a warning to all the users, holders and traders of Virtual Currencies that providing such services are not approved, registered or authorised.
Highlights of the Press Release were
1.As there is no centralised registry, therefore, the loss of a digital wallet could result in the permanent loss of Virtual Currency. The existence of digital wallets makes them more prone to fraudulent means like theft, hacking and malware.
2.As it works on the principle of decentralisation so no single authority has a say in it therefore In case of dispute there is no recourse.
3.They are highly volatile in nature as no backing of any asset is there.
4.It involves financial and legal risk as the status of Virtual Currency is not clear.
5.There are chances of breaking laws against money laundering and combating the financing of terrorism due to its anonymous function.
After these warnings being issued on 1 March 2017, the Deputy Governor stated that to develop confidence in crypto-currency market regulatory authority should be there. Blockchain technology can not replace currency.
Formation of Inter-Ministerial Committee
In its first report, this committee tried to lift the ban on the Crypto-Currency market in India. They were of the view that people should be encouraged to use Virtual Currencies. It put forward Crypto Token and Crypto Asset Bill 2018 to control the Crypto-Currency market.
Crypto Token and Crypto Asset(Banning, Control and Regulation) Bill ,2018
Highlights of the Bill
- Prohibit dealers of Crypto tokens to be sold as securities or investment schemes as there is a gap in the regulatory framework
- A register to be maintained of all the transactions on the recognised exchanges.
But as per the directions of the RBI director in the final report, a competitive ban was stated on the Crypto-Currency market in India.
A Bill was passed Banning of Cryptocurrency and Regulation of Official Digital Currency Bill, 2019
Highlights of the Bill
- Definition of Mining– Mining has been defined as an Asan activity aimed at creating a cryptocurrency and/or validating a cryptocurrency transaction between a buyer and seller.
Definition of Crypto-Currency– As any information, code, number or token which has a digital representation of value and has utility in business activity, or acts as a store of value or a unit of account.
- Prohibited Activities– Crypto-Currency cannot be used as legal tender in India. The use of Crypto-Currency in India is banned in the following manners
- medium of exchange
- as a payment system
- for providing crypto-currency related services
- for trading with Indian Or Foreign Currency
- Credit basis
- for raising funds
- for investments
3. Experimentation, research and teaching– Experimentation and research regarding the Crypto-Currency market is allowed but no Crypto-Currency can be used for payment in such activities.
4. Penalties and Offences-
- Mining or dealing in Crypto-Currency is illegal and a punishable offence with a fine or imprisonment up to 10 years.
- Advertising, Soliciting or abetting in use of Crypto-Currency is punishable offence with imprisonment of 7 years
- Acquiring, storing or disposing of Crypto-currency with intent to use is punishable with a fine.
- Any subsequent conviction for any offence is punishable with a fine and imprisonment of five years to ten years.
5. Maximum Fine– The maximum amount of fine shall be higher of
- 3 times the loss or harm caused or
- 3 times the gain made
6. Amendment to Prevention of Money Laundering Act 2002– The PMLA is amended to include the offences prescribed by the BCRDC Bill.
7. Digital Rupee and foreign digital currency-The Central Government may in consultation with the Central board of the RBI approve the digital rupee.
8. Power to exempt and grant immunity– The Central Government can grant immunity to a person from prosecution for any offence.
9. Transition– Any person shall on or after the date of commencement of the act that is brought in pursuant to the BCRODC Bill, but on or before expiry of 90 days from the date of commencement , make a declaration in respect of any Cryptocurrency in such persons possession and shall dispose of the same within the aforesaid period.
The Supreme Courts Ruling on March 4,2020
The Supreme Court of India struck down the Circular dated April,6 regarding the Crypto-Currency market ban in India. Both RBI and the government of India have confirmed that Crypto-currencies including Bitcoin is legal in India.
Future of Crypto-Currency market in India
We don’t even need to look at the Crystal ball to answer this question. Even if the ban on the Crypto-Currency market in India has been lifted still the future is not very good for the same. There is a lack of regulatory guidelines from the government of India regarding the same.
The government is not encouraging anybody to enter the Cryptocurrency market. Co-founder of Unocoin was arrested for illegally operating the country’s first Bitcoin ATM at a mall in Bangalore. This proves that the future of the CryptoCurrency market is uncertain.
Today, 5 million people in India use the Crypto-Currency market which can easily grow in future. But it is only possible if the marriage of India and the Crypto-currency market is blessed by the Government of India.
As globally other countries have explored and used the Crypto-Currency market as an asset to building their economy same can be possible in India by forming proper guidelines regarding the same.
Frequently asked Questions
Q-1. Can Bitcoin’s bought in India?
Yes, Bitcoins can be bought in India. You will need a Bitcoin wallet to buy Bitcoins. There are 11 exchanges from where Bitcoins can be bought.
Q-2. Is it legal to buy Bitcoins in India?
It is not illegal to buy or sell Bitcoins in India
Q-3. What is the value of a Bitcoin in Indian Rupees?
1 Bitcoin equals 7,12,913.59 Indian Rupees
Q-4. Can lower amounts like ₹1000 be invested in Bitcoins?
Yes, the minimum amount that is needed to begin investing in Bitcoins is around ₹500. To start with it is not necessary to buy 1 Bitcoin.
Q-5. What the other forms of Crypto-Currency in the market in India besides Bitcoin?
Today there are other Crypto-currencies available
- Lite coin
In the end, it is a risky market but not harmful to invest in Bitcoins in a small amount or an amount which you are ready to take the risk. So, first analyse then enter the Cryptocurrency market.
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