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“Cryptocurrency is such a powerful concept that it can almost overturn governments.” ~ Charlie Lee

In 2009, the first decentralised cryptocurrency, Bitcoin, was developed by Satoshi Nakamoto, a then pseudonymous person. The digital currency sector has not looked back since then. Cryptocurrencies are already the next big thing in the world, and many proclaim that they will be the money of the future. Such currencies are designed to work as a medium of exchange, where individual ownership records are stored in a computerised database. However, the fact that they are not regulated by anyone, be it a government or an international organisation, is what sets them apart. In India, the crypto market already consists of around a hundred million people in a span of just ten years, whereas the stock market, which has been in existence for decades, has only around seventy million people. These numbers have led the government to contemplate the idea of a Cryptocurrency Bill to address certain issues, make necessary changes, and regulate this asset. However, the rumours related to the bill have created much panic in the crypto market.


The biggest factor that differentiates cryptocurrencies like Bitcoin and Ethereum from other types of money is their privacy. The government, however, is not very optimistic about this aspect of the digital currency and is striving to centralise it so that it does not grow uncontrollable. Even though regulation would contravene the fundamental principle of cryptocurrency, since the government would soon be able to track transactions performed using these digital currencies, the government believes it will be able to safeguard its citizens by doing this. In addition to that, the mining, holding, and trading of private cryptocurrencies like Zcash, Monero, DASH,Verge and Beam may also be banned in the future as they are fully non-traceable. As a result, investors who are relying on these cryptocurrencies to earn a profit will lose a significant portion of their investment. Furthermore, the bill would create a ruckus. As evidence, the crypto market crashed right after the announcement of the bill, as investors panicked and began to square off their positions. The bill may also have an impact on cryptocurrency exchanges and businesses that rely on them for their existence.


The crypto bill, as envisaged by many, has some positives too. The main aim of regulation is to stop the usage of cryptocurrency for illegal activities such as terrorist funding, buying banned items, etc. With regulation, the tracking of the payments made through Crypto will become much easier, also reducing the incidences of money laundering and tax evasion. The RBI will also be launching India’s own Digital Rupee as a legal tender this year. This will help increase confidence and awareness among the general public about virtual currency.


Cryptocurrency is a relatively newer concept. It is complex and has a long way to go. With the new cryptocurrency regulation bill, the government desires to take steps to discourage its use for activities. Though, the bill is still just a draft and is yet to be completed. The government decided in the Budget 2022 to levy 30% tax and 1% TDS on virtual digital assets, including cryptocurrency. The Govt. should take a bit softer stand and reduce the tax percentage through the Crypto Bill so as not to discourage investors. Also, stringent regulation must be avoided as it may turn out to be a heavy disincentive for the public. Excessive regulation can hurt public sentiment for the asset. Another thing that the government can do is to make some rules regarding the mining of Crypto. When miners buy processors in bulk, it further aggravates chip shortage that has been continuing for over a year now. The future of crypto in India lies in this bill, so the government must formulate and implement it with utmost caution. As Charlie Lee says -“Cryptocurrency is such a powerful concept that it can almost overturn governments.”

By Vasu Mahalwan


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