Cryptos, an unknown world
There has been an epoch-making shift regarding the approach of the Indian government towards digital currency, often called cryptocurrency. A bill named ‘Cryptocurrency and Regulation of Official Digital Currency Bill, 2021’ has been proposed in the parliament’s houses, which would look into the question of the uses of cryptocurrencies in a newer manner. This bill is designed to prohibit every sort of private cryptocurrencies, however, the technological part of the cryptocurrencies is to be promoted for certain exceptional situations, as explained in the bill.
Cryptocurrencies have gone through a big journey in the Indian political-economic context for almost a decade. From being outright rejected by the policymakers to becoming an accepting phenomenon for its unprecedented technological advances, its journey is to be studied to understand its economic context. So, let's have a historic observation!
From 2013 to 2017
In 2013, the Reserve Bank of India published a notice warning the Indian citizens not to use the digital currencies in any way for the sake of the security-related issues and potential risks that they predicted then. The RBI also claimed to put strong surveillance over the digital currency world, especially upon the activities and developments of Bitcoins and Litecoins.
But, as the banks didn’t stop allowing cryptocurrencies as a medium of transaction, the RBI on 1st. February 2017 issued a notice declaring that virtual currencies are not legal.
From 2018 to 2020
The Central Board of Digital Tax (CBDT) submitted a draft to the finance ministry demanding a ban on cryptocurrencies in March 2018. The institute claimed that cryptocurrencies are equivalent to black money and therefore must be prohibited to come into use. In the next month, following CBDT’s notice, the RBI published a notice to completely prohibit the banks and all the financial bodies to allow digital-currency transactions. As a result, the prices of the cryptocurrencies fell and their exchanges were stopped too.
In this situation, while the committee appointed by the finance ministry recommended banning the cryptocurrencies in February 2019, the Supreme Court on the other hand, in the response to a PIL, allowed banks and financial institutes to transact in cryptocurrencies.
In 2021
On February 9, 2021, the finance minister declared that the committee, constituted under the finance ministry, has recommended banning the private digital currencies, however, such currencies might be allowed in the formal economy if issued by the Indian Union. In March 2021, the finance minister and her ministry started to state some positive approaches towards cryptos. Since November 2021, keeping a strong negation towards the cryptocurrencies, the RBI expressed its intent to bring a cryptocurrency in the market, while the finance minister in the parliamentary session declared this as a ‘risky zone’ and claimed to bring a bill regarding this.
