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Current Affairs
Title : New Cryptocurrency Bill
Date : Nov 24, 2021
Description :
GS III
Topic à Economy related topics
- Context:
- The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, will be presented in Parliament during the winter session.
- Essential Requirements:
- Its goal is to develop a framework that will make it simpler for the Reserve Bank of India to introduce an official digital currency.
- It aims to regulate bitcoin and, reportedly, restricts the usage of private cryptocurrencies.
- The Bill's specific contours have not yet been made public, and there have been no public deliberations.
- Here's how things are right now:
- In India, an inter-ministerial committee on cryptocurrency has recommended banning all private cryptocurrencies except state-issued virtual currencies.
- The Reserve Bank of India (RBI) has also highlighted concerns about the market for cryptocurrencies, which it has communicated to the government.
- In March 2020, the Supreme Court overturned the RBI's 2018 circular forbidding banks and financial organisations from providing services related to cryptocurrencies (on the basis of "proportionality").
- Cryptocurrencies: What Are They and How Do They Work?
- Cryptocurrencies are digital currencies that function without the help of a central bank and rely on encryption to control the generation of money units and verify the transfer of payments.
- Cryptocurrencies such as Bitcoin, Ethereum, and others are examples.
- What is the government's motivation for banning cryptocurrencies:
- Consumer protection: Consumers are at risk from cryptocurrencies. They are not legal tender because they are not backed by the government.
- Market volatility: They are incredibly volatile due to their speculative character. For example, Bitcoin's value has decreased from USD 20,000 in December 2017 to USD 3,800 in November 2018.
- Security risk: If a user's private key is lost, he or she loses access to their cryptocurrency (unlike traditional digital banking accounts, this password cannot be reset).
- Malware threats: Technical service providers (cryptocurrency exchanges or wallets) may store private keys that are vulnerable to malware or hacking in some cases.
- Money laundering.