dr. Daleep Pandita
The Indian government is now planning to ban transactions with cryptocurrency, 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 immediately ban cryptocurrency in India. Even for the second time, “The Cryptocurrency and Regulation of Official Digital Currency Bill – 2021” was reported by Parliament, which, under pressure from hidden investors, proposed at the very least taxing these transactions, thus preventing the introduction of this type of currency. in our country. Since virtual currency has no legitimate status in India despite the fact that many Indian investors have already joined this fight, this is contrary to the ongoing fully accounted digital payment mode that is increasing day by day, assuming the preferred mode of money transfers in our Financial system.
Born in 2009, the crypto currency traded through more than 5000 coins, even with Bitcoin and Dogecoin commonly used, is elementary devoid of any intrinsic value, has no legal entity and cannot be exchanged against a certain amount of another raw material and has no physical form. Without any control by a country’s financial regulator, the circulation system of coins is also private individual with no involvement of any third party as evidenced by its name – crypto. With a huge strength of more than $2 trillion, the crypto market has not experienced any kind of proxy that often appeared in the stock markets so far, so this bull market has gained enough trust and confidence from investors without fear of losing money on this platform. . Currently, this virtual currency has evolved as an essential part of the international economy and has become a safe and comfortable means of financial transactions around the world, eventually becoming a reliable tool for diversifying the investment portfolio.
In India, the concept of cryptocurrency was actually conceived after the demonetization that shook people’s financial confidence in flat currencies and it even got a boost during the COVID pandemic where the mode of digital payment has become a normal mode of financial transitions. . Despite the undue pressure created by the unwanted lobbying of more than 80,000 less exposed crypto investors, who temporarily seduce 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 asked to critically analyze the pros and cons of this form of economy 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 authorization 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 cybercrime, 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 drawbacks that produce cryptocurrency transactions that are 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. By realizing such dramatic consequences, even countries like China, the Gulf States, Turkey and some European countries have already banned the circulation of cryptocurrency in their economies.
Although in 2018, RBI ordered our banking and non-banking financial institutions not to allow any transaction involving cryptocurrency investments, the much-needed decision that caused many crypto exchanges in India to shut down. Again based on a detailed study conducted by a committee set up for this purpose by the Reserve Bank of India, he reaffirmed his earlier commitment to immediately implement a ban on the introduction of cryptocurrency into the Indian financial system. Instead, lessons should be learned from the experiences of those countries that are already banning cryptocurrency, which could greatly aid legislation with enough teeth to combat this threat that poses serious internal and external threats to the economy and our nation, creating a strong message. to the unauthorized lobbying of hidden investors promoting risky and dangerous cryptocurrency activities in India.
(The author is a senior official of the Indian government PSU)