Cryptocurrencies are a complicated paradigm, and regulation in the field has been the subject of hot debate over the years. In India, there has been a great deal of ambiguity over the future viability of this currency in the mainstream.
SEBI Moots Oversight of Cryptos
In a recent development, according to reports, the Indian market regulator, the Securities and Exchange Board of India (SEBI), advised regulators to oversee and therefore regulate trading that is conducted with the help of cryptocurrencies. This, according to many, indicates a far more accommodating stance that the body has acquired compared to the central bank of the country.
The RBI has maintained, that the usage of private virtual assets, that is, digital currencies, in the form of cryptocurrencies pose a major risk, not just to the markets, but to the whole economy as a whole, as it poses a macro risk. | Representative image
The RBI has maintained, that the usage of private virtual assets, that is, digital currencies, in the form of cryptocurrencies pose a major risk, not just to the markets, but to the whole economy as a whole, as it poses a macro risk.
Although the government prepared a bill in 2021, that, in essence, would proscribe the use of cryptocurrencies, it did not go through with presenting or introducing the bill in parliament, leaving private currencies unregulated. The government at large appears to have had a nebulous stance with regards to the world of cryptocurrencies. Nevertheless, the RBI has maintained its staunch opposition to the crypto world.
In fact, the government's banker is in favour of banning stablecoins. Stablecoins, in theory, are cryptocurrency tokens with a stable price. The stability of the currency is attained by positioning the token to an asset such as gold or fiat.
SEBI advised regulators to oversee and therefore regulate trading that is conducted with the help of cryptocurrencies. | Representative Image/File
SEBI's proposition is similar to the model in the 'home of cryptos', The US, as the Indian market watchdog, said it could monitor cryptocurrencies that take the form of securities as well as new offerings called Initial Coin Offerings (ICO).
RBI Raises Concerns
As far as the RBI is concerned, cryptocurrencies could lead to myriad issues, including tax evasion, and they also invoked the impact, it could have directly on the bank itself, as these digital assets could lead to a decline in 'seigniorage'. A seigniorage is the profit accrued by the state and its institutions by issuing currency.
Globally, cryptocurrencies, after experiencing a boom in the pandemic years, observed a decline until recently, when the numbers saw a slight uptick in prospects.
Bitcoin, the biggest virtual currency in the market, currently stands at USD 65,568.40. Meanwhile, Ethereum stands at USD 2,951.58.
