No Proposal to Recognize Bitcoin As a Currency
In a world where the contentious digital asset namely bitcoin is garnering growing appreciation and acceptance, India is untouched by its charms.
Bitcoin, throughout this year, has gained a special status of legal tender in El Salvador and huge endorsement from public figures like Jack Dorsey and Elon Musk. But is it just the high popularity of the digital asset that has set it on the pinnacle of success in such a short period of time?
Probably not. It is to be noted that the contentious asset has many merits to it that make it an appreciable currency over others. Its property of making trading an easy business and facilitating easy cross-border transactions is what leads to its soaring merits and applicability.
Given its merits, it is crucial to also note that the contentious asset is also, quite fondly, used for nefarious purposes like money laundering and trafficking. It is this use of the currency that makes the authorities hesitant in accepting the better side of the contentious asset.
This gives rise to a pertinent and inquisitive question that every side has two sides to it, with its merit and demerits, thus, why is bitcoin suffering the wrath of the government authorities in India? Well, it is to be noted here that the authority loathes uncertainty and lack of action that comes with the crypto package.
With the nefarious side of the coin, the added disadvantage of not being able to regulate is what adds to the agony of the authorities. Given the anonymous character that the crypto gives to the user, authorities usually find it arduous to track the users’ activities and the user itself.
With unregulated transitions that take place through the contentious assets, the government loses a humungous amount of revenue. Thus, given the merits of the currency, its disadvantages outweigh the positives.
Such antagonizing and aversive attitude of the government can be corroborated by the fact that recently the Union Finance Minister Nirmala Sitharaman has emphatically informed the Lok Sabha that there effectively will be no proposal before the government.
Thus, the proposal recognizing bitcoin as a currency is effectively not on the table. Sitharaman, in fact, also emphasized o the fact that the government does not collect data on bitcoin transactions. This strategically shows that the government has no interest in granting the status to the currency any time soon in the future.
In fact, it is to be noted that in the recent turn of events, the Indian government had got the Indian crypto traders anxious again due to its antagonistic stance against the contentious digital currency. With its introduction of the recent crypto regulation law, many traders were found desperately trying to sell a part, if not all, of their cryptocurrency portfolio.
This was mainly due to the fact that the panic sell-off amongst crypto investors was triggered by the announcement that a crypto bill would be introduced in Parliament’s winter session. What had made the whole scenario all the more concerning and frightening for the traders and investors was the declaration of the fact that the bill mentioned that trading of all private cryptocurrencies would be prohibited.
Though, given the Indian government’s odious stance against cryptocurrency, such a step must not have come as a surprise. But given the speculative, whimsical nature of the market, this led to havoc and anxiety, which led to panic selling in the market. This had effectively led to plunging values in the crypto market, where the prices had fluctuated frequently. Given that speculation can do such harm and lead to such panic, it can be argued, that a complete ban will definitely lead to havoc in the market.
It is to be noted that Bitcoin, which is a digital currency that was introduced in 2008 by programmers, strategically allows people to buy goods and services and exchange money without involving banks.
According to the reports, the speculations remain true as the government actually plans to introduce a bill in this regard. The Cryptocurrency and Regulation of Official Digital Currency Bill 2021 can be introduced in the ongoing session. Given the nature of the bill, it can be conjured that the bill will ban all private cryptocurrencies but might allow the underlying technologies.
But in the pursuit to eradicate the non-conforming, non-perfect aspect of the asset, will the government forgo the positive potential of the currency? Luckily, the answer might come as good news for the investors, as the government plans to roll out its regulated version, CBDC, in the market.
This claim can be corroborated by the fact that the government has effectively received a proposal from the Reserve Bank of India strategically seeking an amendment to the RBI Act, 1934. The proposal is demanding to enhance the scope of the definition of “banknote”. This is being done to include the currency in digital form.
Given the extensive research that is going on in the CBDC, with RBI examining use cases and working of the currency, one can conjure that the CBDC can be a reality in the near future.
CBDC has its own merits if it is introduced in an undisputed, phased manner. The introduction of a CBDC has immense potential to provide significant benefits in the future. These benefits will include such as reduced dependency on cash in the society, reduced settlement risk, and higher seigniorage due to lower transaction costs.
Thus, one can finally state that the phased introduction of CBDC in India will possibly lead to a more efficient, robust, regulated, and legal tender-based payments option for the public which will be an added advantage. Though, it cannot be denied that there are associated risks with such introduction which, in the light of protecting the welfare of the user, need to be carefully evaluated, but given the potential benefits in the future, one can robustly state that something efficient can be born out of the meticulous efforts of the central bank.
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