India has become the latest country to ban cryptocurrencies as a payment method, with officials warning of “potential health hazards” and saying that using digital tokens would only encourage more speculation. The move comes ahead of a global regulatory crackdown by G20 nations on cryptocurrencies late in 2018. Experts say India’s decision was not unexpected and is expected to be followed globally later this year or early 2019.
India is planning to ban cryptocurrencies as payment method. This will be a part of the country’s “Project Unnati” which aims to bring transparency and accountability in the financial sector.
Prime Minister Narendra Modi of India (AFP)
India is planning to prohibit the use of cryptocurrencies for payments and to regulate cryptocurrency trading as an asset.
According to sources in the Economic Times, the government would prohibit the use of cryptocurrencies such as Bitcoin and Ethereum for payment. They might, however, be kept as an asset, similar to stocks, gold, or bonds.
According to reports, the Modi administration would also prohibit crypto firms from using ads to encourage people to invest.
The specifics were worked out at a meeting with leaders from the crypto business on Monday to discuss the future of cryptocurrency in the country.
This comes at a time when India was beginning to recognize Bitcoin as a valid payment option.
In August, Unocoin, a bitcoin trading platform, announced that its customers could use Bitcoins to purchase certificates from over 90 different businesses, ranging from Domino’s pizza to Baskin-Robbins ice cream.
Cryptocurrencies are currently unregulated and unbanned in the nation.
The crypto community has frequently requested that bitcoin be classed as an asset rather than a currency by Indian authorities, and the government seems to be listening.
India is planning to prohibit the use of cryptocurrencies for payments and to regulate cryptocurrency trading as an asset. Pexels is responsible for the images on this page.
A regulatory system to govern cryptocurrencies is expected to be put in place as part of the negotiations, with the Securities and Exchange Board of India (Sebi) serving as the authorized regulator.
In a symposium held by the Australian Strategic Policy Institute today, Indian Prime Minister Narendra Modi addressed crypto for the first time publicly.
‘It is critical that all democratic countries collaborate on this and guarantee that it does not fall into the wrong hands, spoiling our kids,’ Modi added.
The law is expected to be introduced in the forthcoming winter session of Parliament by the Indian government.
While the proposed regulation would stymie consumer adoption of cryptocurrency in India, it is an improvement over previous intentions to outright prohibit cryptocurrency in the nation.
Following Prime Minister Narendra Modi’s catastrophic ‘demonetisation,’ which erased 80% of the country’s currency, India essentially prohibited crypto transactions in 2018. People who trade in cryptocurrencies might face up to ten years in prison, according to a government commission.
The law is expected to be introduced in the forthcoming winter session of Parliament by the Indian government. (Photo courtesy of Marco Verch)
The restriction was removed by the Indian Supreme Court in March 2020, resulting in a cryptocurrency trading boom, with Indian cryptocurrency investments increasing from roughly $200 million to almost $40 billion in the previous year.
Despite its opposition to cryptocurrencies, which it sees as a danger to the country’s financial stability, the Reserve Bank of India (RBI) began planning to establish its own Central Bank Digital Currency in February (CBDC). The Bank of England is also considering introducing its own CBDC.
India’s Finance Minister previously said that they were “looking at ways in which experimentation might happen in the digital world and cryptocurrencies” in order to come up with a balanced approach. Because cryptos are a developing technology, Prime Minister Modi’s recent words suggest that progressive measures may be made.
While most countries have banned private crypto-assets, they are still receptive to promoting blockchain, a secure database technology that is at the heart of virtual currencies and, according to experts, has the potential to revolutionize international commerce.
While cryptocurrency trading is not explicitly regulated in the United Kingdom, services such as bitcoin derivatives trading do need authorization.
China is one of the nations that has taken a hard line on cryptocurrency, outlawing crypto trading and eradicating any residual activity, alleging that it jeopardizes the country’s efforts to achieve carbon neutrality.
Regulating cryptos rather than outright banning them seems to be a smart decision by India, and other big economies are likely to follow suit.
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