Dr Daleep Pandita
The Indian government is now seriously considering banning transactions using cryptocurrency, which is a form of virtual currency, in our country. Based on an in-depth study by an appointed committee, the Reserve Bank of India (RBI) very recently made strong recommendations to the Union Ministry of Finance to ban cryptocurrency in India immediately. Even for the second time “The Cryptocurrency and Regulation of Official Digital Currency Bill – 2021″ was postponed by Parliament, which under pressure from hidden investors, at least proposed to levy taxation on these transactions thus indirectly legitimizing the introduction of this type of currency in our country. As virtual currency does not hold any legitimate status in India, despite the fact that many Indian investors have already joined this fray, is contrary to the ongoing fully responsible digital payment mode which is increasing day by day assuming the preferred mode of transitions financial resources in our financial system.
Born in 2009, the cryptocurrency transacted through more than 5000 coins even with Bitcoin and Dogecoin commonly used, is basically devoid of any intrinsic value having neither legal entity nor exchangeable against a certain quantity of another commodity and does not has no physical form. Without any control by a country’s financial regulator, the circulatory system of meme coins is privately individualistic with no involvement of a third party as evidenced by its name – crypto. With a massive strength of over $2 trillion, the cryptomarket has so far not experienced any sort of volatility that is frequently seen in stock markets, so this bull market has gained enough trust and trust from investors without fear of losing money on this platform. . Currently, this virtual currency has evolved as an essential part of the international economy, becoming a safe and comfortable means of financial transaction across the world, ultimately becoming a reliable tool for diversifying the investment portfolio.
In India, the concept of cryptocurrency was basically conceived after the demonetization that shook people’s financial confidence on flat currency and it actually gained momentum during the COVID pandemic during which the mode of digital payment has become a regular mode of financial transitions. Despite the excessive pressure created by the unwanted lobby of over 80,000 less exposed crypto investors, temporarily luring our political system under the false pretense of much needed rapid economic development, these unauthorized illegal financial transactions continue unabated.
Although our financial system has always demanded to critically analyze the pros and cons of this form of economics before legitimizing it and introducing it into our system. To date, cryptocurrency is not considered a legal tender like that of a flat currency issued by the Indian government, but now requires financial permission and legality in our country.
Financial instability, hidden transactions, lack of control by regulators, unfair use of funds including embezzlement, increase in economic crimes, promotion of financial fraud, increase in cyber crimes, tax evasion, violation of foreign exchange principles, money laundering and , above all, complicity in terrorist activities due to cross-border transactions are some of the significant disadvantages that make cryptocurrency transactions very risky and dangerous for our country. So if cryptocurrency is not a risky preposition for investors, but it is equally dangerous and highly volatile for our global financial system and not recommended in the interest of national safety and security for a country like India. Realizing such dramatic consequences, even countries like China, Gulf countries, Turkey and some European countries have already banned the circulation of cryptocurrency in their economy.
Although in 2018, RBI ordered our banking and non-banking financial institutions not to allow any type of transaction involving cryptocurrency investments, the much needed decision that drove many crypto exchanges out of business in India. Again on the basis of a detailed study conducted by an appointed committee constituted by the Reserve Bank of India for this purpose, he reaffirmed his earlier commitment to immediately introduce a ban on the introduction of cryptocurrency into the Indian financial system. Instead, lessons should be learned from the experiences of those countries already banning cryptocurrency, which can be of immense help in legislation with adequate teeth to combat this menace which poses serious internal and external threats. to the economy and our nation, thus sending a strong message to the unauthorized lobby of hidden investors promoting risky and dangerous cryptocurrency activities in India.
(The author is a senior official of Indian government PSU)