Government likely to ban cryptocurrency exchanges in India
What's the story
A government panel has advised the Centre to shut down cryptocurrency dealers/exchanges in a bid to curb the use of virtual currencies in India.
This comes at a time when trading of cryptocurrencies has increased globally; investors have been seeing very high returns from virtual currencies.
However, experts say such a move by the government wouldn't restrict the use of cryptocurrencies.
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About
What is cryptocurrency?
Cryptocurrencies are digital/virtual currencies that use cryptography for security, regulation, and generation of currency units.
They are created and transacted electronically and are also difficult to counterfeit because of the security features.
They aren't issued by central authorities, making them "immune" to government interference.
Bitcoin, introduced in 2009, is one of the world's oldest and popular virtual currency in circulation.
Bitcoin
CME Group to launch Bitcoin futures soon
The government panel's recommendation comes at a time when Bitcoin's value has skyrocketed in regard to all major currencies globally.
The cryptocurrency hit record high values after the US-based CME Group, the world's largest futures and options exchange operator, announced it would offer Bitcoin futures by 2017-end.
After the derivatives exchange operator's announcement, Bitcoin traded at an all-time high of $6,938.
Information
Virtual currencies hit record high of $184 billion
According to Cryptocurrency industry website Coinmarketcap, the aggregate value or market cap of all the cryptocurrencies in the world reached a record high of $184bn on 1 November. Their market value is almost equal to that of Goldman Sachs and Morgan Stanley combined.
India
Bitcoin price around Rs. 4.9 lakh in India
In India, the price of one unit of Bitcoin is around Rs. 4.9L as of now, compared to the Rs. 1.79L value it had three months ago (as on 2 August 2017).
One of the primary reasons that resulted in the recent high volumes of cryptocurrencies is the lower return given by traditional investments like gold and real estate.
Government
Government will intervene soon
At present, mining, buying and selling virtual currencies is neither illegal nor acknowledged by the Indian government.
However, according to the statement made by Finance Minister Arun Jaitley in August 2017, the government will take a proper stance on how it will deal with virtual currencies and a government-appointed panel has already submitted a report in this regard.
Measures
Closure of cryptocurrency dealers not helpful: Bitxoxo founder
Meanwhile, market experts say shutting down cryptocurrency dealers/exchanges wouldn't work.
Indian Bitcoin exchange operator Bitxoxo's Cofounder-CEO, Hesham Rehman, said instead of banning dealers, the government should take measures to stop the buying and selling of Bitcoins and other cryptocurrencies in cash as it would reduce illegalities.
He added even if such dealers/exchanges are shut down, people can always buy cryptocurrencies from foreign exchanges.
Information
Govt should provide suitable guidelines
Hesham Rehman said the government should provide proper guidelines to cryptocurrency exchanges to help both the buyers and exchanges of virtual currencies. He added exchanges have already requested the government to penalize those trading in cryptocurrency using cash.