RBI And Finance Ministry Clash Over Ban On Cryptocurrencies
New Delhi/Mumbai, 25th November 2021: The central government may allow certain cryptocurrencies to be traded as an asset or a commodity. But that cryptocurrency will not be legal for any transaction and the government will also charge tax on crypto.
The government is finalizing the bill related to cryptocurrency and the final seal on it will be from the Prime Minister’s Office (PMO). After that, it will be presented in the cabinet and then in the parliament. However, the bill, proposed to be introduced in Parliament in the next few days, calls for a ban on all private cryptocurrencies. But some crypto may also be approved as an exception under the technology used in cryptocurrencies.
One or two cryptocurrencies may get approval
According to sources, the Reserve Bank of India (RBI) wants a complete ban on crypto, but the Finance Ministry is in favor of allowing crypto as an asset so that it can be brought under the tax net. There is talk of bringing tax rules on crypto in the upcoming budget. According to sources, one or two cryptos may be allowed to be traded as assets.
Ban reports caused a huge drop in the cryptocurrency values
The cryptocurrency market witnessed a massive drop on Thursday following the news of the cryptocurrency ban. According to crypto-related exchange WazirX, cryptocurrencies such as bitcoin, ethereum, dogecoin and polkadot saw an average fall of up to 20 percent in value. There are 10.07 crore people who have invested in crypto in India.
According to crypto research firm CREBACO, Indians’ investment in crypto has reached a value of $ 10 billion, or about Rs 75,000 crore, while in April last year this investment was only around $ 90 million, or about Rs 6,500 crore. There are 15 cryptocurrency exchanges operating in India. The Blockchain and Crypto Assets Council (BAC) has asked these cryptocurrency investors to avoid panic for the time being.
According to Himang Jani, Head of Equity Strategy, Broking and Distribution, Motilal Oswal Financial Services, cryptocurrencies are increasingly being adopted globally and investors are attracted to it by seeing the high returns from investments despite heavy risks. There is a lot of uncertainty regarding crypto right now due to the absence of a regulator in the sector.
In the event of a ban
Cryptocurrency is an international business. According to experts, even if it is banned in India, its buyers will be found in other countries. Those who have invested in crypto exchange through banks will have to see how much time the government gives to sell crypto. In the event of a ban, the price of crypto will fall globally and investors may incur heavy losses if they sell in a hurry.
54 percent do not want cryptocurrencies to have legal status
According to online survey company LocalCircles, around 54 per cent people do not want cryptocurrencies to be given legal status in India. Instead, they want it to be recognized as a digital asset held abroad and taxed accordingly. During the survey, feedback was taken from more than 56,000 people living in 342 districts of the country. In the survey, 26 percent people said that in this way virtual currency should be given legal status and it should be taxed.
Only few cryptocurrencies will survive in near future: Rajan
Former RBI governor Raghuram Rajan said that there may be more than 6,000 cryptocurrencies today, but only a few will survive in the near future. He said that people only hold cryptocurrencies with them for two reasons. One for the higher price and the other for the payment. Now the question arises whether we really need 6,000 virtual currency for payment. In the future, one, two or even a handful of virtual currencies will be required for payment.
Government should take care of all aspects while taking the decision
The cryptocurrency industry on Wednesday appealed to the government to take all aspects into consideration to regulate crypto assets in India. Industry stalwarts have also urged investors in the country not to jump to any hasty conclusions.
Buy-UCoin CEO Shivam Thakral said that the company expects the proposed bill to take into account the aspirations of Indian cryptocurrency holders, Indian crypto entrepreneurs and investors. He added that the crypto bill should have enough flexibility for new blockchain projects to flourish.