Title : THE REGULATION OF CRYPTO CURRENCY BILL, 2021

Date : Dec 12, 2021

Description :

GS II

 

Topic à Government Policies & Interventions

 

• Context:

 

• The Central Government will decide soon whether or not the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 will be tabled in Parliament's winter session.

 

• Important Requirements:

 

• It aims to regulate bitcoin and, apparently, prohibits the use of private cryptocurrencies.
• Its goal is to establish a framework that will make it easier for the Reserve Bank of India to launch an official digital currency.
• So far, the Bill's particular contours have not been made public, and no public discussions have taken place.

 

• The current situation is as follows:

 

• In India, an inter-ministerial commission on cryptocurrency has suggested that all private cryptocurrencies be banned, with the exception of state-issued virtual currencies.
• The Reserve Bank of India (RBI) has also expressed worries about cryptocurrencies traded in the market, which it has conveyed to the government.
• The Supreme Court authorised banks and financial institutions to resume services linked to cryptocurrencies in March 2020, overturning the RBI's 2018 circular prohibiting them (on the basis of "proportionality").

 

• What are Cryptocurrencies and How Do They Work:

 

• Cryptocurrencies are digital currencies that operate independently of a central bank and employ encryption techniques to govern the production of units of money and verify the transfer of funds.
• Bitcoin, Ethereum, and other cryptocurrencies are examples.

 

• Why does the government want to outlaw cryptocurrencies:

 

• Consumer protection: Cryptocurrencies pose a threat to consumers.
• They are not legal tender since they lack a governmental guarantee.
• Market volatility: Because of their speculative nature, they are extremely volatile. Bitcoin, for example, has dropped in value from USD 20,000 in December 2017 to USD 3,800 in November 2018.
• Risk in the field of security: If a user's private key is lost, they lose access to their cryptocurrency (unlike traditional digital banking accounts, this password cannot be reset).
• Malware threats: In some circumstances, technical service providers (cryptocurrency exchanges or wallets) store these private keys, which are vulnerable to malware or hacking.
• Laundering of funds.

 

• Source à The Hindu à 11/12/21 à Page Number 1

Tags : Malware, Reserve Bank of India