15/06/2019 - Economy

KEY POINTS

·        The Centre’s reported plans to criminalise crypto currencies 10 years in jail for holding, selling or dealing in crypto currencies  seems so harsh.

·        If implemented, it can send wrong signals to investors, geeks, digital entrepreneurs and technologists on India’s understanding of not only cryptocurrencies but also on how we look at blockchain, the ground-breaking technology that powers cryptocurrencies.

Unpopularity of crypto currencies

·        Cryptos are feared not just for their sheer speculative propensities, but also for their capacity to undermine sovereign currencies (the latter is an exaggerated apprehension).

·        A currency that is not based on any real economic activity.

Needs regulation

·        There are no official or other data available that point towards misuse of cryptocurrencies for illegal ends.

·        In India, an estimated 30 lakh Bitcoins are reportedly in circulation. From a value of a little over Rs. 60,000 at the start of 2017, the Bitcoin now commands a value of nearly Rs. 6 lakh, with a global market cap of $10.2 trillion.

·        Cryptos are recognised in the US as an asset class. Firms like Paypal, Uber, Visa and Mastercard have all signed up as part of the consortium to control it, these firms are also established in India.

·        Hence usage of crypto currency become relevant.

·        Criminalising possession of cryptocurrencies will impact such investments. Bankers and investors now consider the cryptocurrency market at par with derivatives. The NYSE plans Bitcoin futures through a platform called Bakkt.

·        Cryptos are an alternative asset to fiat currencies; controlled by none, they cannot be manipulated by governments with vested interests.

Legalising the cryptomarket can help beneficiaries emerge from the shadows and make productive investments in an economy witnessing a digital transformation.

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