What is a cryptocurrency?
If we break the word Cryptocurrency, then it means the currencies that are generated by computer codes. This is the reason; it does not have any issuing agency like Reserve Bank of India. All the cryptocurrency that is generated by ‘miners’ on the decentralized network design solve the compound mathematical problems.
Recently, while delivering the speech of Union Budget, Finance Minister declared crypto-currencies as illegal. but will explore the use of blockchain technologies, said Finance Minister Arun Jaitley during his Union Budget 2018. The Minister also said these virtual currencies remain illegal for all purposes in India and the government will work towards eliminating the use of these. Cryptocurrency is being used to fund illegitimate transactions according to the minister.
Have a look at the consequences, if the Bitcoins are legalized in India:
- Bitcoins would come under the purview of RBI’s 1934 Act.
- All the Bitcoin investors would be taxed.
- RBI will be issuing guidelines, regarding investment and purchase of Bitcoins.
- When foreign payment will be made through Bitcoins, then it would come under the purview of FEMA Act.
- Returns from investment in Bitcoins would be taxed.
Trades from India accounted for 10% of global cryptocurrency trade in the month of May. India accounted for 16,754.76 coins by trade volume. On the Bitcoin cryptocurrency trading market, India has been ranked fourth.
In India, the first impact of the legalization of Bitcoin is estimated to further boost trading volumes and Bitcoin activities by significant margins. The Legalization of Bitcoin would also allow Bitcoin startups to address concerns over security as well as risks pertaining to the use of Bitcoin and ultimately work towards improving its infrastructure. With the help of legalization of Bitcoin, one can remove apprehensions around its reliability as a currency for the average Indian consumer. However, there have been reports of Bitcoin trading amounting to money-laundering and that it broadcasts the financing of terrorist outfits. Bitcoin startups in India are implementing multiple security checks, to take the edge off these fears. In general, the Bitcoin companies look for a valid ID proof from users. It also includes government-verified address documents, like a PAN card or an Aadhaar card.