As countries around the world finally open their financial systems to cryptocurrency, adopting it as a legal tender and a means of paying for goods and services, other countries are clamping down on anything crypto-currency related, case in point China, while others, like India, are not banning cryptocurrency outrightly but placing strict regulations on digital assets.
Cryptocurrency is taking over the financial space globally, as countries such as El Salvador has made bitcoin an official currency, and South Korea have plans to lift the ban on cryptocurrency-related activities, enacting laws that makes it easy for cryptocurrency exchanges to operate in the country.
In the light of all these improvements worldwide, other countries such as India are tightening the laws on some aspects of cryptocurrency and relaxing the laws on others.
LIKE RUSSIA, LIKE INDIA?
The adoption of cryptocurrency around the world is facing its fair share of hindrances from different governments. Russia, for example, banned crypto trading but has relaxed the laws on other activities. The Russian government, following China’s announcement that it will ban all crypto-related activities, announced that they were not going to follow in China’s footsteps. Vladimir Putin, the Russian Prime Minister, said, in an interview that Russia was considering using crypto as a means of payment in oil dealings with other countries.
The Indian government, on their part, are skeptical about bitcoin and cryptocurrency as means of payment, fearing that digital assets will be used for money laundering financing terror. In the wake of this fear, the Indian government banned cryptocurrency as a currency.
WHY HAS INDIA BANNED CRYPTOCURRENCY AS CURRENCY?
The growth of bitcoin is something that many governments around the world did not envisage. Many had hoped that the craze for digital assets was just that, a craze. But as more people got into the cryptocurrency space, the benefits in a decentralized financial system were alluring, too alluring that federal governments could no longer sit and watch. The general consensual fear amongst most governments in the world is that cryptocurrency, if adopted fully, will make obsolete countries fiat currencies, thereby sinking the economy and leaving the government scrambling for air in an economy controlled by everyday people.
But is cryptocurrency eroding the already established financial systems in countries and rendering their official fiat currencies useless?
So far so good, the answer is no. There is no empirical evidence that proves that cryptocurrency had a negative effect on the economy. If anything, cryptocurrency allows for the distribution of wealth. Everyday people, people who before now were shut out from the profitable wealth-making financial systems, now have access to the same volume of wealth and opportunities that the gatekeepers have. Or at least to an extent.
Unlike fiat currency, cryptocurrency has no borders, and just like the world witnessed with dogecoin and its booming community, former poor people now have hope of breaking free from the clenching fist of poverty.
The adoption of cryptocurrency, while it has the potential to render fiat currencies useless, does not spell doom for federal governments and Central Bank governors around the world. That is if they are willing to be open about it.
The world is evolving, and blockchain technology is the future. The high level of anonymity with blockchain technology, and the decentralization of powers makes it more alluring. For governments around the world, banning cryptocurrency doesn’t solve the feared problem. Instead, the wise thing to do is to find ways to utilize blockchain technology and decentralized finance, one that not only makes citizens financially wealthy but also enriches the government financially. The case of Citycoins and what they’re doing with Miamicoins and the city of Miami comes readily to mind. Governments around the world can, and should, embrace the decentralized powers of blockchain technology.
The Indian government’s fear that cryptocurrency will replace the Indian Rupees is the reason they’re banning cryptocurrency as a legal tender.
With this recent ban, merchants in India won’t be able to pay or receive payments in crypto.
WHAT ARE THE IMPLICATIONS OF THE BILL ON CRYPTOCURRENCY ENTHUSIASTS AND TRADERS IN INDIA?
This ban, while many might think is mild, given the approval from the Indian government to recognize cryptocurrency as a store of value, the implication is that businesses that have foreign clients won’t be able receive payments for their goods and services. More than the ban on cryptocurrency as means of payment, the Indian government has also banned the listing of private coins on cryptocurrency trading exchanges such as Redot.com.
The ban on private coin listing and cryptocurrency as a means of payment was enshrined in the Cryptocurrency and Regulation of Official Digital Currency Bill.
The Indian government, according to reports, is finalizing the bill that will regulate bitcoin trading and the trading of other cryptocurrencies.
The bill will provide the Indian Securities and Exchange Board (Sebi) the regulatory rights to cryptocurrency exchanges.
Another provision in the bill is for the Indian government to tax cryptocurrency investors and traders who trade on exchange platforms. In a closed-day meeting with the Parliamentary standing committee on Finance with top cryptocurrency industry representatives, the government is putting plans in motion to have its own digital currency.
The Reserve Bank of India (RBI) is to spearhead the creation of digital rupees. Central Bank Digital Currencies are not unique to India. Other countries that fear that bitcoin and cryptocurrency will destroy their economy, no thanks to the decentralization of most cryptocurrencies, have been working to have CBDCs.
The goal of CBDCs is to displace decentralized digital currencies and allow federal governments and Central Banks control these currencies.
While the bill on regulations on cryptocurrency is good on paper, Tanvi Ratner, CEO of think tank Policy 4.0, believes that “regulating crypto as an asset doesn’t solve all the issues, but it takes cryptocurrency out of the currency arena, and this is one of RBI’s worries.”
As the world continues to grapple with emergence and adoption of cryptocurrencies, countries around the world are in search of policies to regulate and effectively manage cryptocurrency.