A new bill to be introduced in parliament aims to block all private cryptocurrencies in India. It comes almost a year after the Supreme Court lifted a Reserve Bank of India ban on payments related to crypto. Mint decrypts what the bill means for crypto investors.
How does fiat money compare to crypto?
The traditional currency is kept in paper or metal form such as banknotes and coins, or in electronic form in bank account entries. Cryptocurrency is also a form of electronic money. The difference is that the record of the cryptocurrency is managed simultaneously by thousands of computers instead of a centralized entity like a bank. Therefore, the record of the cryptocurrency cannot be manipulated by any person or authority. Cryptocurrencies like Bitcoin also tend to have a limited supply. This has increased their price in the face of huge money pressures from central banks around the world following the Covid-19 pandemic.
What is the difference between blockchain and crypto?
Blockchain is a technological system used to manage records in such a way that they cannot be easily manipulated. The system can be applied to any type of recording, e.g. B. Education certificates, country or, as with cryptocurrency, money. Governments worldwide have rated the blockchain positively and the cryptocurrency negatively. This also seems to be the view that is represented in the crypto bill to be presented in parliament. However, experts argue that the two cannot be separated. They say that blockchain is powered by cryptocurrency and cannot function effectively without the latter.
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Does India Consider Crypto A Legitimate Currency?
In 2018, the Reserve Bank of India banned banks from processing payments related to cryptocurrency. This ban was lifted by the Supreme Court in March 2020 as a violation of economic and professional freedom under Article 19 (1) (g) of the Constitution. Since then, the cryptocurrency sector in India has been in a legal vacuum.
What does the government’s crypto bill suggest?
The law presented by the government for introduction in parliament is intended to ban all private crypto currencies and lay the foundation for an official digital currency. Such official currencies are being considered by several central banks around the world including China. Cryptocurrency professionals have argued that cryptocurrencies such as Bitcoin and Ether operate in public ledgers and therefore cannot be called “private” cryptocurrencies. The detailed provisions of the bill have not yet been published.
Should You Sell Your Cryptocurrency?
The detailed legislation provides more clarity on whether you should sell your cryptocurrency. However, the bill mentions that certain exceptions can be made in order to preserve the underlying technology from cryptos (blockchain). Not all bills introduced in parliament are passed in the same session. The bill could be forwarded to a panel or postponed to a later meeting. Previous investments in cryptos cannot be criminalized due to Article 20 (1) of the Constitution, which prevents the state from enacting retroactive criminal laws.
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