What you need to know about the potential ban on private cryptocurrency

The Union Government will move a bill to prohibit most private cryptocurrencies in India in the Winter Session of Parliament which starts November 29 according to a Lok Sabha bulletin released on November 23 The Bill proposes ldquoto build a facilitative framework for the creation of an official digital currency which will be issued by the Reserve Bank of IndiardquoThese changes concern some 1520 million Indians who are estimated by Indian crypto exchanges to have invested in the currency as well as the countryrsquos cryptotech market that is expected by Nasscom to grow to 241 million by 2030Here is what you need to know about the encrypted virtual currency and the governmentrsquos view on itWhat is cryptocurrencyA cryptocurrency is a digital or virtual currency The name ldquocryptordquo comes from the ldquoencryptionrdquo techniques used to protect the large network of computers on which the currency is based This network is decentralised and as such designed to remain outside the control of central and government authorities A technology known as blockchain wherein a record of all the transactions that have ever been conducted is maintained and every transaction is confirmed by each computer on the network is said to provide a secure structure for such tradelsquoBitcoinrsquo is the worldrsquos largest and most popular cryptocurrency Ethereum Dogecoin Binance Coin Tether Ripple Litecoin and Solana are some others However crypto tends to be marred by legal and regulatory uncertainties its use towards illegal purposes as well as exchange rate volatilityWhy is it in the newsA Bill seeking to ban private cryptocurrencies was listed by the government for the upcoming Winter Session of Parliament The Cryptocurrency and Regulation of Official Digital Currency Bill 2021 intends to prohibit ldquoall private cryptocurrencies in Indiardquo according to a Lok Sabha bulletin The Bill however allows for certain exceptions to ldquopromote the underlying technology of cryptocurrency and its usesrdquoHow many people own crypto in India Who will be impactedEarlier this year a broker discovery and comparison platform BrokerChooser seemingly incorrectly stated that at 1007 million India was home to the highest number of crypto owners globally Nischal Shetty the founder of bitcoin and cryptocurrency exchange WazirX disputed this on Twitter saying the number was actually close to 1520 million based on estimates by Indian crypto exchanges CoinSwitch Kuber and WazirX are among the wellknown crypto exchanges to have emerged in IndiaThe urban population as also young people from Indiarsquos tier II and III cities are among the ardent takers for this digital asset classIn May 2021 Indias digital currency market was estimated at 66 billion versus 923 million in April 2020 according to blockchain data platform Chainalysis Meanwhile the cryptotech market in the country is likely to hit 241 million by 2030 said a report released in September by Nasscom in association with WazirXHow is cryptocurrency usedCryptocurrency is mainly used to buy goods and services online or traded for profit In other rare instances people have used crypto to crowdfund projects including a recent documentary lsquoBeyond the Borderrsquo by Kashmiri filmmaker Naseer Khanday about Afghanistans skiing cultureWhat is the official stand on cryptocurrencyGovernments and central authorities across the world usually express reservations about cryptocurrency because its decentralised structure is designed to operate outside the realms of their controlPM Narendra Modi in a recent meeting shared a cautionary view saying ldquoTake cryptocurrency or Bitcoin for example It is important that all nations work together on this and ensure it does not end up in the wrong hands which can spoil our youthrdquo Further RBI governor Shaktikanta Das had recently said this form of currency was a threat to the financial systemThe government however has remained open to blockchain technologies and its applicationsIs this the first attempt at regulating cryptocurrencyNo In 2018 the RBI had issued a circular asking lenders to stop dealing in virtual currencies The order however was set aside by the Supreme Court in March 2020 allowing banks to work with crypto exchanges Interest in cryptocurrency and daily trading volumes rose after the circular was quashedWith inputs from IANS