What is Cryptocurrency Regulation Bill? 10 things to know before you panic
The government will soon table a bill on cryptocurrency in the Parliament. Investors are in a state of panic on whether to panic.
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Cryptocurrency investors in India had one hell of a night Tuesday. Bitcoin prices alone crashed to its lowest rates since October 13. All thanks to the government.
The government will table a bill on cryptocurrency in Parliament. Illustration: DailyO
In the upcoming Winter Session of the Parliament, the government is introducing a bill to regulate cryptocurrency. But before you go into panic mode, take a look at these 10 points explaining the situation:
1. TO PRESS THE PANIC BUTTON OR NOT
Currently, cryptocurrency investors in India are confused whether to invest in it, given that the prices have reached a record low; or to bail out of it by selling what they have. What do you think is the right move?
2. WHAT DOES THE BILL SAY?
Hold on. Let's understand what the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 description reads.
It says, "To create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India. The Bill also seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses."
Removing all the mumbo-jumbo from the purport of the bill, the ‘prohibit’ part is what has caught everybody’s attention. Is this what Prime Minister Narendra Modi meant when he said that unregulated cryptocurrency is ruining the lives of the youth – just BAN it?
3. ‘BAN’ ON ‘PRIVATE’ CRYPTOCURRENCIES
Popular cryptocurrencies Bitcoin, Etherum and the likes of it are based on public blockchain. They may not be included under private cryptos like Monero or Dash. So, investors in public blockchain-based cryptos may sit down for now.
However, the government – even in its draft bill – has not yet defined what exactly ‘private’ and ‘public’ cryptocurrencies are.
4. WHY GOVT WANTS TO REGULATE CRYPTOCURRENCIES?
The government is worried about more than just a bunch of 20-30 something people trying to make some side cash through cute-looking Shiba Inu dog coins. Private cryptocurrencies which offer privacy to users, may be misused for hawala transactions or terror funding.
Trading on private cryptos is often untraceable unlike public cryptos.
5. GOVT CAN’T BAN IT?
So, one of the arguments is that no government can ‘ban’ cryptocurrency. Because, the value of a crypto is decided by random people around the world who decide to invest in it. However, the government can still make the life of investors difficult by banning the ‘transfer’ of cryptocurrencies from one wallet to another, or stop the operations of exchange platforms like Zerodha.
Think of it like holding on to a bunch of computer files which can be sold for a value, but not being able to transfer the files anywhere. Then, the files or cryptocurrencies are just stuck with you.
6. THERE’S SOME HOPE IT WON’T BE BANNED
BJP MP Jayant Sinha, who chaired the Standing Committee on Finance last week, had said that cryptocurrencies need to be regulated and not banned. Sinha had also spoken to stakeholders.
7. WHAT DO CRYPTO EXCHANCE PLATFORMS HAVE TO SAY?
One of India’s most popular crypto exchange platform WazirX CEO Nischal Shetty asked investors not to panic and believe in our lawmakers.
Day 1119All of us want regulation. We’ve been pushing for it from the last 1000+ daysFinally when regulation process has begun, why panic? We need to have faith in our law makers. There’ll be discussions & deliberationsUltimately, innovation will win ??#IndiaWantsCrypto— Nischal (WazirX) ⚡️ (@NischalShetty) November 24, 2021
On the other hand, Zerodha’s founder Nikhil Kamath had a question for the public and the lawmakers alike.
Is the Indian govt banning cryptos? What happens to everything in circulation already?— Nikhil Kamath (@nikhilkamathcio) November 23, 2021
8. INDIAN CRYPTO HOLDINGS AMOUNT TO NEARLY RS 40,000 CRORE
According to BrokerChooser, a broker comparision and discovery platform, India has the highest number of crypto owners in the world, at nearly 10 crore. The total crypto holdings amount to nearly Rs 40,000 crore.
9. WHAT ARE OTHER COUNTRIES DOING?
There is one country in the world which has banned cryptocurrency and another country which has made it a legal tender. Any guesses on which country may have banned it? CHINA. It’s China, the land where everything that trends is banned. The ban in China forced crypto exchanges like Zerodha to fold their operations. If India decides to do a China, then users can expect something same.
On the other hand, El Salvador has made it a legal tender.
10. MEMERS TAKE OUT THE SHOVEL
Nobody other than memers have a field day when the rest of the world stares at an existential crisis. Here are some of the most hilarious memes to soothe your crypto losses for the day:
So, for now - keep calm and read up on crypto.