After media reported on some banks bringing up the Reserve Bank of India’s (RBI) 2018 cryptocurrency ban to warn their users against dealing in cryptocurrencies, the central bank informed banks on May 31, 2021, that they could not refer to the old order which the Supreme Court nullified last year.
Stating to all commercial and cooperative banks, payment banks, small financing banks, NBFCs, and payment system operators, Chief General Manager Shrimohan Yadav said, “It has come to our attention through media reports that certain banks/ regulated entities have cautioned their customers against dealing in virtual currencies by making a reference to the RBI circular dated April 06, 2018. Such references (by certain banks and regulated entities) to the circular by banks/ regulated entities are not in order as this circular was set aside by the Hon’ble Supreme Court on March 04, 2020.”
Last year, the Indian government came highly close to banning cryptocurrencies entirely. A bill in this respect was suggested earlier in this year’s Union Budget. Meanwhile, circumstances have improved considerably in the previous year, and it appears that the finance ministry has dropped the goal of banning cryptocurrencies. According to an Economic Times report, the government is now contemplating cryptocurrencies as digital assets and enacting rules to protect traders.
Cryptocurrencies are still legal in India, but they are unregulated. As a result, investors are prone to frauds and scams. As a result, the crypto sector has been promoting more participation, with some even asking the government to declare cryptocurrency official cash. While that would seem like a much different scenario, the study illustrates that the government is seeking a middle path that helps balance the interests of all investors.
Bitcoin and Ethereum, for example, have grown in popularity in the nation, and young adults are also interested in altcoins such as Shiba Inu and Dogecoin.
The government aims to plan a Crypto Bill that will be implemented efficiently alongside technological improvements in the virtual world. According to the report, a presentation programme was held with a thorough debate on it. It includes all of the benefits and drawbacks of cryptocurrency. It also highlighted the regulatory approaches employed by other nations and the amount of money invested in such digital currencies by Indian investors.
So unless the bill is introduced and finally enacted by Parliament, Bitcoin and other cryptocurrencies will be classified as digital assets rather than legal currency. It implies that while you can still trade in cryptocurrency and retain it for longer durations, these digital currencies will not be an alternative for the Indian rupee.
The fundamental laws may revolve around who may generate and trade cryptocurrency in India. Anyone with a functional smartphone or laptop and an internet connection may currently create and sell a new coin, which opens the door to several frauds. The law might also include safeguards to protect investors from fraud. It is expected to be covered in next year’s Union Budget.