There's no easy victory in the country's crypto cold war

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There's no easy victory in the country's crypto cold war

Read more on - Polity | Economy | Schemes | S&T | Environment


  • India's own cold war: The Reserve Bank of India (RBI) and Indian crypto industry are in a cold war for long now, in an antagonistic relationship. The RBI is repeatedly warning everyone about risks in cryptocurrencies (CCs), leaving the industry aghast.
  • 2019 Committee: A special committee report in 2019 wanted government to put a blanket ban on private CCs in India, something that put have made crypto investing illegal. Today, mainstream banks have cut all relations with Crypto exchanges, warning customers to avoid such transactions! So investors aren't able to use bank accounts for depositing money or transferring funds.
  • FOMO: Indian investors are upset, as cryptos offer great returns, and with predictions of Bitcoin reaching $4,00,000 in 2021 itself, "fear of missing out (FOMO)" is high. The question is: are all authorities in India scared of digital currencies? No, as the Supreme Court struck down the 2018 RBI circular that started it all.
  • Guru or manipulator: Tesla CEO Elon Musk's tweets and comments created great turmoil in the CC market in 2021, making people suspect his intentions. That price volatility further spooked Indian authorities, who think it's a bubble. Add to that the anonymity of cryptos, and authorities find good reasons to block and ban CCs. Government is also worried about tax losses in the unregulated crypto markets.
  • Worldwide scenario: El Salvador has adopted Bitcoin as legal tender, and Miami, US is openly crypto-friendly. South Korea is bringing laws to regulate, but India is planning to outlaw all private cryptocurrencies. A Bill is arriving in the Parliament soon. India's own CBDC (central bank digital currency) may arrive.
  • Not possible to ban: The government's desire to ban private CCs won't work, as they cannot be truly banned, being global digital assets. Best is to regulate them, and mitigate risks. 
  • Summary: The new law may hand over a victory to RBI in one battle, but the long term war is still playing out, and winners aren't decided yet.
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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          PT's IAS Academy: There's no easy victory in the country's crypto cold war
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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          Excellent study material for all civil services aspirants - begin learning - Kar ke dikhayenge!
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