Is PM Modi Banning Bitcoin and Other Cryptocurrencies in India?
Many Indians and crypto supporters in the country often ask if Prime Minister Narendra Modi is planning to ban cryptocurrencies. This article will clarify these doubts and outline the current state of regulations related to digital currencies in India.
No Way: The Truth Behind PM Modi's Cryptocurrency Policies
Contrary to popular beliefs, Prime Minister Modi is not banning Bitcoin or other cryptocurrencies in India. In fact, the government has taken a more pragmatic approach to regulate the crypto ecosystem, rather than outright prohibition.
Reverse Use of Cryptocurrency as an Alternative to the USD
India has a long-standing relationship with the USD, but now, supporters are advocating for the use of cryptocurrencies as a means to escape the volatility and manipulation of the US dollar. With the current oil price at 103 USD, India, along with other nations, is heavily reliant on holding USD reserves to purchase oil.
Government's Previous Actions and Future Plans
Earlier, the government was planning to ban all cryptocurrencies to curb tax evasion and financial fraud. However, the 2022 budget introduced a significant change. Instead of banning cryptocurrency, the government now requires 30% of the profits from crypto investments to be taxed. This move was aimed at curbing the use of unreported income in the crypto market.
The New Government Bill on Cryptocurrencies and Digital Currency
The government aims to introduce the 'Cryptocurrency and Regulation of Official Digital Currency Bill 2021' in the upcoming winter session of parliament. One of the key objectives of this bill is to create a framework for issuing an official digital currency, mainly by the Reserve Bank of India (RBI). The bill seeks to ban all private cryptocurrencies but allows specific exceptions for the underlying technology.
Current Controversies and Challenges
There is a divided opinion within the government regarding the regulation of cryptocurrencies. While one group is pushing for a complete ban, another group is in favor of regulated usage. These differing views are creating uncertainty. The government has two options: proposing a money bill that requires a 14-day period for passage or using an ordinance, which would be faster but less formal. However, technically, a complete ban might not be feasible. Experts suggest that while local currency transactions for crypto could be restricted, crypto wallets and peer-to-peer networks are nearly impossible to control due to their online nature.
Impact on Indian Exchanges and Users
The proposed ban could severely impact Indian cryptocurrency exchanges. Many exchanges have a significant user base and investment value. According to a research firm, India has the second-highest adoption rate of cryptocurrencies globally. Therefore, regulation is crucial to balance innovation and security in the market. It is essential that the government implements regulations that ensure transparency, reduce financial risks, and protect the interests of crypto users.
Conclusion and Future Prospects
While there is uncertainty surrounding the future of cryptocurrencies in India, the current focus is on regulation rather than prohibition. It is crucial for the government to strike a balance between supporting the innovation and technology of digital currency while ensuring that it does not lead to fraud, tax evasion, or other illegal activities.
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