In April 2018, Reserve Bank of India had banned cryptocurrency trading in India. Which prohibited the use of banking channels for transactions of virtual currencies. Also, on March 4, 2020, The Supreme Court of India revoked this ban on RBI. Some important facts that you should know:
What are virtual currencies?
All forms of non-flat currency traded online come under virtual currencies. They are placed in a globally visible ledger. Furthermore, it is accessible to all the users of the technology and there is no central regulator.
Why did RBI ban cryptocurrency trading?
The RBI raised concerns regarding volatility in the value of virtual currencies, and their anonymous nature. Which makes regulation difficult because it did not want virtual currencies spreading and asked banks not to deal in them owing to the risks involved.
However, India has never been affirmative of Bitcoins and other cryptocurrencies. Seeing the risks of fraud and thus fearing the loss of money high-level government panel on virtual cryptocurrencies. It had previously recommended a ban on all sorts of cryptocurrencies in India. The committee had submitted its report on 23 July 2019. Which banned Cryptocurrency and Regulation of Official Digital Currency Bill, 2019. It is available on the official website of the Department of Economic Affair. Also, the committee had also proposed a fine of whopping Rs 25 crore and imprisonment of up to 10 years for any activity that may be related to virtual currency trading.
What were the results of the ban of cryptocurrency trading ban in India?
In the past two years the cryptocurrency trading shift to overseas where there were clearer policies and rules and regulations. Hence, this maintained a sense of security and transparency in the system. Thereby eliminating the unnecessary fear of trading in virtual currency.
Similarly, for companies continuing operations, securing funding became difficult. The investors were not ready to back them amid the uncertainty of regulation.
After much thinking and deliberation and carefully noting the number of losses that the Indian economy has suffered from the ban Supreme court of India decided to lift off the ban. Finally giving the new trade opportunities in the market.
According to IMAI data, there are roughly 1.7 million verified users in India. This comprises of 5-10% of the $430 billion global virtual currency market.
Almost all cryptocurrencies like Bitcoin, Ethereum, Ripple are some of the virtual currencies present in our country. The Internet and Mobile Association of India would like to closely work with RBI and the government on a policy framework for cryptocurrencies in India.