People across the globe are using bitcoin and other cryptocurrencies. Some are using it for actual transactions, while some use it as an investment. Cryptocurrency is changing the things we have been doing for a long time. Virtual currencies are the future. Even Nandan Nilekani, the Infosys non-executive chairman, has pointed out that cryptocurrencies may get acceptance in India as a store of value, even though not as a transaction thing. In this article, We are going to discuss the future of Cryptocurrency in India.
In India, cryptocurrency is not a legally authorized currency. Cryptocurrency is not accepted as currency implies two things: first, it is not backed by the sovereign guarantee; second, you can not use it to buy or sell anything in India. However, it does not mean it is prohibited. It is neither allowed nor prohibited.
Then why cryptocurrency has huge demand if its legal status is in question. Because, though cryptocurrency is not a sanctioned currency, it is a good asset. For example, gold cannot be transacted, but you can hold it as an asset. Cryptocurrency is not illegal, just there are no regulations regarding it. Government is yet to take a progressive stance towards cryptocurrency.
Many investors are keen on investing in cryptocurrency. Not only the investors, but anyone seeking asset diversification can invest in it. But you should know some basics about cryptocurrency before you start investing in it. The returns are good, but the risk involved is much higher. Hence, learn about it before investing. You can learn about cryptocurrency and crypto investing on erecoin.io.
As we know, the Internet has changed a lot of things for us. Cryptocurrency is one of the innovations made possible by the internet. In other words, Cryptocurrency is an extension of the internet.
India made progress in past years because of the Internet and software. The IT sector in India is making exponential growth. During the Pandemic, many major operations like providing vaccines were done online. Private as well as public sectors are using the internet for public welfare. India has the policy to make India cashless. It suggests that India has taken a step towards progress by this internet revolution. It also suggests the progressive intent of the government. The same progressive intent towards cryptocurrency cannot be denied.
Cryptocurrency is very significant for the world. It is significant because of its independence and autonomy as no single individual or entity is controlling it. It is backed by blockchain technology, which has the capability of reducing cyberattacks, allowing smart contracts, secure privacy, etc. Therefore, it is most likely that whenever the regulation will be formed, the government will decide in affirmation. The ecosystem developed by Cryptocurrency will be maintained.
According to Bloomberg's report in June, about 15 million people in India are trading in cryptocurrency. Cryptocurrency will help us to promote entrepreneurship and startups. It will be a beneficial step for the economy. It is a good step towards the environment.
The Reserve bank of India had decided to ban the cryptocurrency, but the apex court set aside this decision. Considering these conditions and data it can be said that there is a huge possibility that cryptocurrency will not be banned. Many experts believe the same.
It is also possible that the government will create its own cryptocurrency. Shaktikant Das, the governor of RBI, has stated that the Central Bank is planning to start its first Digital Currency trial program by December. The RBI's proposed digital currency will not be the same as Cryptocurrency. However, crypto experts believe it is a good step. These are the best-case scenarios.
Let’s try to understand the other side of the coin. The governmental institution is there for your protection. It wants to protect you from bad factors. If you are using cryptocurrency, then it will try to protect you from some hazardous things involved on that platform. To fulfill this purpose, regulations will be formed.
But, When the regulations are formed, the liability for holding the crypto will increase. For instance, we don’t know the taxation over the cryptocurrency yet because the tax over it is undefined. But when the tax will be imposed, it will increase liability on the person trading or investing in Crypto.
The other issue involved in the same example is whether it should be treated as currency or property. The Internal Revenue Service, the revenue department of the US which is responsible for collecting taxes, has defined cryptocurrencies as property rather than currencies. Individual investors, regardless of where they acquired digital currencies, are subject to capital gains tax regulations when it comes to declaring their cryptocurrency expenditures and gains on their yearly tax returns. This is only one issue, there are other issues like how to regulate a thing that does not attach itself with any institutions.
Setting aside the circular of RBI 2018 which specifies investors to not deal in digital currencies, the Supreme Court in its 2020 judgement has lifted the ban and have allowed banks to provide services related to crypto transactions. This has come up as a ray of hope to those who are willing to explore the market of cryptocurrency in India.