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Wednesday, July 6, 2022

Sitharaman says’ that progress is to be made on the cryptocurrency

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Finance Minister Nirmala Sitharaman has expressed that elaborate consultations have taken place over the cryptocurrencies issues in India. She further stated that the opinion of the Reserve Bank of India has also been considered.

In a note of positivity for cryptocurrencies, the finance minister defined it as a futuristic thing that is impossible to shut out.

The hold of cryptocurrencies is growing at an astounding rate across the world. There have been speculations that India may come up with its own digital currency. But the Union finance minister says that this will need to be a well thought over decision.

Sitharaman cited the example of El Salvador. El Salvador had adopted bitcoin as a legal tender. But the move didn’t strike the right chord with the public, which protested on the streets against the same.

The Union finance minister has specified that cryptocurrency has more to it than understanding digital currencies well, or being literate about the same. Questions that definitely need to be looked into are that is the currency transparent or available for the general public? 

Financial experimentations are not a frequent practice at national levels, which makes El Salvador an exception. But, several other countries are discussing the matter of the central bank having a legitimate cryptocurrency. This could be a possibility, said the finance minister.

Finance Minister Nirmala Sitharaman has expressed that elaborate consultations have taken place over the cryptocurrencies issues in India. She further stated that the opinion of the Reserve Bank of India has also been considered.

Sitharaman has opined that the present-day era is not the kind wherein one can say that he doesn’t care about what is going around, or can stay neutral. But going by the example of El Salvador is an entirely different story. Cryptocurrency has to first entice faith in itself, for being a futuristic thing that can no longer be shut out.

The finance minister was asked if India should have its own cryptocurrency. She responded by saying that we should come up with something that is suited the best for our systems. Technology is one of the key strengths for India. With fintech, we get command over a range of functions that can be played with – we are an economy that withholds possibilities to a large extent. But, one has to proceed with caution. Financial actions at the government level need to be well thought over before they are executed.

In another important development in the matter, Shaktikanta Das, the RBI governor has said that by December 2021, the central bank may come up with its own digital currency. He further expressed that the work is being conducted in a phased implementation strategy to accomplish the same.

The RBI governor has specified that RBI is treading with a great deal of caution over the central bank digital currency (CBDC), with CBDC being a new product for the central bank. As per RBI, CBDC should be perceived as a legal tender. CDBC is the same as a fiat currency, exchangeable one-on-one with any other fiat currency. But the difference is that the form of CDBC is different, digital rather than physical.

Virtual private currencies, including Bitcoin, have found widespread acceptance across the years gone by. While the currencies are digitally encrypted and decentralized, they are not linked to or regulated by any government. CDBC, instead, will be the digital version of the fiat currency. It will be the kind that finds government backing.

Earlier in September, R. Gandhi, a former RBI deputy governor had said that the people have recognized that crypto cannot become a currency. Being a legal tender is a fundamental element of currency, which is missing in this instance.

Gandhi recommended that provisions should be made to treat and regulate crypto as a separate asset class. This will empower governments from around the world to deal with the entire range of illegal activities that are associated with virtual currencies.

On cryptocurrency, an inter-ministerial panel had been set up with the Secretary (Economic Affairs) as the chairman. The panel was set up to propose specific actions on virtual currencies after studying the related issues. The panel has already submitted its report recommending that all cryptocurrencies, apart from the virtual currencies issued by the state should be banned in India.

#Crypto #indiawantscrypto #wazirxwarriors

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