New Cryptocurrency Bill
GS 3: Mobilisation of resources
- The Union Government will introduce a Bill to regulate cryptocurrency and ostensibly ban all private cryptocurrencies, along with 25 other pieces of legislation.
- The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, which is yet to be officially approved by the Cabinet, seeks to create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India.
- The central bank is looking at launching a pilot project for an official digital currency soon.
- The Bill also seeks to prohibit all private cryptocurrencies in India. However, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.
Reasons For Adoption of Crypto in India
- Financial inclusion
- Establish India as an Integral Part of the New Financial Ecosystem
- Capitalize on New Technology and Services Opportunities
Issues associated with ban of cryptocurrency:
- Categorising the cryptocurrencies as public or private is inaccurate as the cryptocurrencies are decentralised but not private.
- Ban is most likely to result in an exodus of both talent and business from India, similar to what happened after the RBI’s 2018 ban.
- Banning as opposed to regulating will only create a parallel economy, encouraging illegitimate use, defeating the very purpose of the ban.
- Regulation is must
- Clear definition of crypto-currency
- Strong KYC Norms
- Ensure transparency
- Entrepreneurial wave in India’s startup ecosystem and create job opportunities.