INDIA MAY CONSIDER REGULATIONS FOR CRYPTOCURRENCIES

BY : AVADHI JAIN

BACKGROUND:

Cryptocurrencies means a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank. In other words, it is basically virtual money with no physical matter that is there are no notes or coins. It also verifies the transfer of assets. It exists only in electronic form.it is based on internet and uses crypto-graphical functions for financial transactions.One of the well known form of cryptocurrency known to the world is BITCOIN. One of the main features of cryptocurrency is that it does not come under the control of the central authority and there is no interference as well by the authorities the other interesting feature is that it can be sent to two parties via private as well as public keys thus helping its customer from paying large amount of fees that is paid in traditional financial institution.In 2017 there were two separate Writ Petitions filed in the Hon’ble Supreme Court of India.  Where one of the Writ Petition was for regulations for cryptocurrencies and other for a complete ban of the cryptocurrencies to the extent of them being called illegal. In the late 2017 the Supreme Court of India decided to hear both the Writ petitions together that is the Writ Petitions were clubbed together by the Court.

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CURRENT ISSUE:

Due to time and again change in the officials and bureaucrats there has been modification and changes happening with respect to the idea of cryptocurrencies. The Writ petition filed in the Supreme Court will decide the fate of cryptocurrencies in India, which will be known to us mostly on 27th April 2020. As of now the RBI regulations that curbed cryptocurrencies like bitcoin have been dismissed as the Court believed that it was a violation to Article 19 (1)(g) of the constitution of India. The reason to do so as stated by the Supreme Court is that due to no legislative regulations and laws available dealings in cryptocurrencies is a legitimate trade and can’t be held illegal as of now. The Court said this on the 4th of March 2020. The reason to do so was because the Article 12 (1)(g) of the constitution of India clearly states that everyone is allowed to practice trade and profession of their own choices. Though there are reasonable restrictions to this Fundamental right but as stated that there is no legislative order/rule/law forbidding this it can’t be held illegal. Also in 2018 the cryptocurrency exchange filled a suit against RBI as the RBI being the central bank of India passed directives to all the banks that it has does not allow any bank to either facilitate or trade in cryptocurrency. There was a panel made which was headed by Former Economic Secretary Subhash Chandra Garg which made a draft bill related to cryptocurrency. The bill gave certain powers to the government such as power to exempt certain cryptocurrencies and also to handle activities such as mining, trading, selling, holding and use of cryptocurrency by others. One of major topics which is being discussed is that of there being allowance of cryptocurrency by RBI and same to be recognised and regulated by SEBI (Securities and Exchange Board of India). though all this still may not lead to cryptocurrency being used as legal tender money. This all is supposedly being discussed though it is at a very Early stage of its discussion. The Indian government is also said to be weighing its possibility in handling of the cryptocurrency. Moreover, there is a possibility of a framework to be soon formed after discussions and deliberation with the Central bank.

CONCUSION:

Though the whole decision as to cryptocurrencies would be regulated or not depends on the Judgement of the Supreme Court of India which would be delivered mostly on 27th of April 2020. The fact that if this currency is to be called illegal it would still be used but via underground business networks and then won’t ever be able to track down sources for the same. But there is also the possibility if it is held legal then atleast it can be kept under track and record of the authorities.   

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