What Experts Are Saying About The Future Of Crypto In The Country Amid Government Plans

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India recently took a sharper note on cryptocurrencies, thanks to its robust growth in the country amid a lack of regulation. However, things are likely to undergo a drastic change as the government is keen to introduce rules and regulations to the digital currency industry. On Thursday, November 18, Prime Minister Narendra Modi said cryptocurrencies must not fall into “the wrong hands and spoil our youth”, urging all democratic nations to come together and ensure that such things do not happen . The government and the RBI had recently hinted at putting in place strict regulatory control over cryptocurrency to prevent money laundering and terrorist financing, rather than banning it altogether.

Speaking at the Sydney Dialogue in a virtual opening speech, Prime Minister Modi said: “India’s industry and service sectors are undergoing massive digital transformation using technology for resource conversion and protection of biodiversity. Take for example cryptocurrency or bitcoin. It is important that all democratic nations work together on this subject and ensure that it does not fall into the wrong hands, which could spoil our youth. “

The comments come against the backdrop of a high-level meeting chaired by the Prime Minister on the regulation of digital tokens last week. Cryptocurrencies are still not taxed in India, but have not been recognized as official currency. However, according to an Economic Times report, cryptocurrencies may be permitted in India as an asset class, rather than being banned. This means that it will not be recognized as a valid currency to settle transactions, but can be held as an asset like gold, stocks or bonds.

Speaking of Modi’s recent comments on cryptocurrencies, WazirX founder Nischal Shetty took a neutral stance. “Our respected Prime Minister talking about crypto and the need for regulation is a good thing for India. It means a lot to the crypto ecosystem. It further strengthens our belief that India will stay ahead of this phenomenon. global, ”he told News18.com.

According to the Economic Times report, the government is in the process of finalizing relevant legislation, banning the use of crypto for payments, within two or three weeks. “Active solicitation would not be allowed … Details of the bill are being finalized,” the report said, citing a government source.

“A complete ban on cryptocurrencies will not be appropriate as the world is moving in this direction. As a country, we will be left behind if we ignore it. Rather, we should pass it with proper regulations, ”said Kumar Gaurav, founder and CEO of Cashaa, in a note to News18.com.

“The idea of ​​CBDCs (Central Bank Digital Currency) is in principle a good one and many countries are working on it, but it is also important to understand that even if CBDC does intervene, it will have to coexist with private cryptocurrencies. Bitcoin can still be used as a reserve asset against which the central bank’s CBDC can be pegged, ”he added.

The Reserve Bank of India, on the other hand, has repeatedly warned against the cryptocurrency, fearing that the country’s macroeconomic aspects and financial stability will be hampered if coins are allowed to circulate freely. Addressing a SBI conclave on Tuesday, November 16, he said there were “much deeper issues” related to virtual currencies that could pose a threat to India’s economic and financial stability. “At the RBI, we started to take a closer look at the business models and strategies of banks. Make your business decisions, we will not interfere, but we will see what kinds of vulnerabilities and what kinds of risks build up, and our first priority would be to warn the banks themselves, “he added.

Analysts said, however, that the central bank must answer unanswered questions before replacing cryptocurrency with cash. “We can’t compare cryptos with money, different cryptos have different utilities, some of which are inherently very strong, for example Ethereum. The web 3 revolution is happening at a rapid pace, but our financial system is old and it needs to evolve. And the CBDC may be a step in that direction, but it’s early enough to tell if governments around the world are right. Coming to RBI’s booth on CBDC, there are still many unanswered questions that RBI will need to answer before replacing it with cash. Going forward, the industry will evolve based on technological advancements and the government’s position on it, ”Gaurav said of the RBI’s inhibitions on cryptocurrency.

The government is also planning to tax virtual currencies in the near future. According to reports, future legislation should settle the tax portion on cryptocurrencies, which should be 1%. Cryptocurrency trading platforms can be classified as e-commerce platforms. The cryptocurrency bill is expected to be tabled during the winter session of Parliament.

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