India Is Considering Banning Cryptocurrency :
India is one of the biggest cryptocurrency markets in Asia and of the fastest-growing markets for cryptocurrency trading in the world. There are 15 cryptocurrency exchange platforms in the country. According to industry estimates, about 20 million people in India own cryptocurrencies, with total holdings of around $6 billion (€5.31 billion). In recent years, due to the outbreak of COVID-19, a large portion of the population was compelled to stay home. As a result, the bitcoin and blockchain technology market exploded faster than ever.
However, the Reserve Bank of India (RBI) has announced that cryptocurrencies are a severe danger to the country’s macroeconomic and financial stability. The rupee in India is only partially convertible, allowing the regulator to monitor and control who has access to the country’s markets. Cryptocurrencies are supposed to be freely exchanged and anonymous, preventing authorities from both monitoring and taxing transactions. The anonymity of these transactions could result in severe problems such as money laundering and terrorism financing.
During the post-monetary policy press conference on February 14 2022, RBI governor Shaktikanta Das also warned investors about investing in cryptocurrencies. According to Das, cryptocurrency investments are risky as cryptocurrencies have no intrinsic value. “I think it is my duty to tell investors that what they are investing in cryptocurrencies, they should keep in mind that they are investing at their own risk. They should keep in mind that these cryptocurrencies have no underlying (asset). Not even a tulip,”
According to T. Rabi Sankar, deputy governor of the Reserve Bank of India, cryptocurrencies were particularly intended to bypass the regulated financial system. Therefore, as shown in a recently proposed bill, India is considering banning most cryptocurrencies. Sankar also declared that banning cryptocurrency is probably the most advised option available to India. There are various good reasons to keep cryptocurrencies out of the formal banking system. Besides, the long-awaited bill also aims to establish a favorable environment for the Reserve Bank of India to launch an official digital currency.
In the federal budget statement on February 1 2022, Finance Minister Nirmala Sitharaman imposed high taxes on cryptocurrency transactions, classifying them as profits from legal but distasteful activities. In India’s 2022-23 budget, a 1% tax on virtual currency payments over Rs10,000 ($133.19) per year would be deducted at the source. For certain individuals, the minimum tax will be Rs50,000 per year.
This is not the first time that the Indian government has applied strict regulations on cryptocurrency trading. In 2018, the government effectively outlawed crypto transactions. However, the Supreme Court overturned the restriction in March of 2020 and ordered the government to take a stand on the issue and create legislation. Since then, calls for stricter rules have intensified amid concerns that an unregulated environment could attract domestic household money to volatile assets, putting savers at risk of a disaster. In 2019, a government panel even suggested that those who mine, generate, hold, sell, transfer, dispose of, issue, or deal in cryptocurrencies face up to ten years in prison.
India will be the first large economy to make cryptocurrency ownership illegal if the ban is implemented. In China, even when mining and trading cryptocurrencies are banned, possession is not punishable.