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One of the leading virtual cryptocurrency Bitcoin which came to limelight during the time of demonetisation was was termed as illegal by RBI. But eventually RBI has to admit the growing popularity of such cryptocurrencies in India and has officially announced to come with some regulation policy document to implement Customer (KYC) norms to ensure safe cryptocurrency transactions.
What is cryptocurrency?
A type of 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.
What is RBI planning to do?
Reserve Bank of India still considers cryptocurrencies as a violation of the country’s existing foreign exchange norms as it does not come under the regulations governing the central banking institution and thus make them highly vulnerable to illegal funding and cyber-attacks. RBI is also planning to set up financial awareness programmes to let the people know about cryptocurrencies and their related threats.
In one of the reports to the Finance Ministry the Government has highlighted the need of stringent, enforceable acts for unlawful practices. These studies also took account of various leading examples of nation like US and Canada where the cryptocurrencies lead to a complete washout of taxes for the governments financial agencies.
How big is the market size of Cryptocurrency?
As per the reports by Coin Marketcap, the crypto-asset market worth is more than $35 Bn. The market is on decline at the rate of 46.9% in the last 30 days, but this decline is assumed to be temporary and it is expected to grow into manifolds. One of the largest market share is of Bitcoin whch is around 47%.
RBI Notification – Termed Bitcoin as risky
Post Demonetisation, parallel economy has surfaced itself quite prominently and the growing Bitcoin popularity has cautioned RBI to clearly specify its take on it. RBI in one of their notification said, “The RBI advises that it has not given any license/authorization to any entity/company to operate such schemes or deal with Bitcoin or any virtual currency. As such, any user, holder, investor, trader, etc., dealing with virtual currencies will be doing so at their own risk.” .