Monday, July 15, 2024

Why is Bitcoin Trending in India? Will It Double Your Money?

Indian markets are not legally or ethically ready for cryptocurrencies. Bitcoin as well as the latest Shiba Inu are gaining popularity but only on the sidelines. That’s primarily because of the ongoing debate abut its use and facilitation by the government and the Reserve Bank of India (RBI). The RBI, which regulates all financial regulations in India, passed a circular in 2018 starting that all cryptocurrencies should come under its ambit. However, on March 4, 2020, the Supreme Court quashed the RBI ruling.

However, it cannot be denied that the cryptocurrency has become one of the most talked-about investment options. This is despite fears that the government has the power to legally ban virtual currencies. It is notable that the government does not consider cryptocurrencies as a “legal tender”.

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We look at some of the things said by people in the know about the Bitcoin. This will help us determine what should be stance on whether investing in Bitcoin is safe in India.

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Indian experts on Bitcoin currency:

Nirmala Sitharaman- Finance minister

Nirmala Sitharaman has admitted, “The Government doesn’t consider cryptocurrencies legal tender or coin. The government will consider all measures to eliminate the use off crypto-assets in financing illegitimate activities or as one part of the payment system.”

The minister acknowledges that the government has to understand and utilise block chain technology to be part of the digital economy. However, she added that an Inter-Ministerial Committee (IMC) has asked for all private cryptocurrencies to be prohibited overall in India. This does not include currencies issued by the government.

“The Government may take a decision on the recommendations of the IMC. Therefore the legislative proposal and it might be introduced within the Parliament following the due process of law,” Sitharaman said.

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Nischal Shetty – CEO and Founder, WazirX

In a chat with Financial Express Online (FE Online), WazirX CEO Nischal Shetty says, “It (crypto) is famous  among millennials in recent days”. Since purchasing Bitcoin is legal in India, citizens can buy or sell cryptocurrencies in India.

Neeraj Dubey – Partner, Singh & Associates

On the other side of the coin is corporate lawyer Neeraj Dubey. He told FE Online that privately issued cryptocurrencies are not safe. According to him, the government has routinely sent warnings about buying or selling virtual currencies. Apart from the fact that they are not considered legal in India, they also don’t find regulatory protection in India.

Is Investing in Cryptocurrency a Good decision?

It is notable that the government does not consider cryptocurrencies as a legal currency. Earlier investors used gold to hedge against stock volatility and now they’re targeting cryptocurrencies.

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Additionally, the government has legal authority to ban the virtual currencies being traded nowadays. This supports several factors such as easy access and use, universal recognition, inherent security, lower transaction fees, lack of interference from the banking system etc.

This puts investing in cryotocurrencies at risk.

Some key risks to cryptocurrencies:

·      Electronically stored currencies are at risk of online crimes such as hacking and malware attacks

·      It is easy to lose passwords, which puts the system at risk fr individuals as well

·      Retreiving a loss on virtual currencies would be a challenge because of legal issues

·      Virtual transactions are vulnerable to illegal transactions

·      Activists also suggest that these currencies could become a means to fund subversive activities such as smuggling and trafficking

FAQs on Bitcoins

What does the RBI state?

The RBI there are potential financial, operational, customer protection, and legal risks associated with virtual currency.

Should you invest despite risks?

Platforms such as WazirX are a part of the Internet and Mobile Association of India (IAMAI). Additionally, the Supreme Court squashed the RBI ban on cryptocurrencies.

What is the future of cryptocurrency in India?

Dubey says that the regulators and governments have been sceptical about the virtual currencies and they are apprehensive about the associated risks to proceed further.

“Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 has already taken in consideration. And it will be issued by the RBI, the road ahead would be troublesome for private cryptocurrency as the aforesaid Bill will prohibit all private cryptocurrencies in India. But it will allow for certain exceptions to promote the underlying technology of cryptocurrency, and its applications,” said Dubey.

What are your views on the future of cryptocurrencies in India? Share your thoughts in the comments below!

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