RBI had earlier banned the use of cryptocurrency in India
The Supreme Court recently permitted trading/ transaction in cryptocurrencies revoking a circular issued by the Reserve Bank of India in 2018 that banned the cryptocurrency transactions. The judgement was rendered by the Bench of Justices S Ravindra Bhat, Rohinton Nariman and V Ramasubramanian.
What the heck is cryptocurrency?
Cryptocurrency is a digital currency which is earned through cryptocurrency mining, where people give their computer’s processing power in exchange for bitcoins or other kinds of cryptocurrency. Because transactions are encrypted, they cannot be tracked and it reaches the recipient without any trace.
A strong encryption technique is used to regulate the generation of currency units and verify the transfer of funds, operating independently from the central bank.
RBI had earlier banned financial institutions and banks from dealing in virtual currencies or cryptocurrency like Bitcoin. Reserve Bank of India believes that virtual currencies raise concerns of money laundering, consumer protection, and market integrity.
RBI’s circular was challenged by the Internet and Mobile Association of India. They stated that Bitcoins were not to be treated like currency but like a commodity. They also contended that it is similar to casino chips and not the actual currency.
RBI had also clarified that their circular didn’t intend to ban cryptocurrency across the country, but imposing its ban on banking services fit right in its domain. Petitioners in reply argued that trading in cryptocurrencies without any lawful-ban, was a ‘legitimate’ business activity under the constitution of India, and Reserve Bank of India couldn’t deny them access to banking channels to carry business related to cryptocurrency. They also said that banning cryptocurrency from the formal economy would only increase its transactions through the black market.
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What the legalization of cryptocurrency in India means for us?
Now, we can invest in bitcoins if we wish to. Also, we can expect financial institutions to bring new methods of accepting bitcoins as a form of currency.
We might get a chance to get away from hectic online banking methods including the addition of debit cards/credit cards. Imagine adding your bitcoins details for payment gateways.
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