It is no secret that Reserve Bank of India has been in the headlines in the past few months considering the battle that has been ensuing in the court following the crackdown by the Reserve Bank of India. However, the battle has taken several twists and turns up until now. Recently, the Central bank is concerned as to what will be the manner in which its decision to abate the operations of virtual currency be received by the people who have been actively committing themselves to cryptocurrency.
A major reason for RBI being worried about the actions of those who have been the part of digital currency is that it believes that there is a chance that the monitoring of these activities would not be possible and therefore, this lack of supervision may lead a large number of people involved in cryptocurrency, especially exchanges, to create dark pools, as well as creation of bank accounts in banks abroad. As a result, there will be issues of money laundering. It would be difficult to deal with these issues if the field is not opaque. There is also a chance that the problems related to taxation might arise in the future is proper supervision is not carried out.
Ever since the regulators have stated that the money shall not be lent to those interested in cryptocurrency, a lot of changes have been taking place in the manner in which the ecosystem of virtual currency had been functioning in the country previously. That is, there has been a change in the manner in which transactions were carried out, for example, a lot of people have shifted to the peer-to-peer method. Also, a lot of users are also speculating regarding shifting to some other country which is much friendlier to the sector of cryptocurrency, in comparison to India. An opinion expressed in the market is that it would have been better if RBI had not been this hard on the sector of cryptocurrency, considering that there were laws in place that could assist the bank in keeping an eye on the transactions that were being carried out. One such norm is “Know Your Customer”. These norms would have let consumers keep an eye on the sector of virtual currency as the operations would have still remained opaque.
A major reason why Reserve Bank of India has been averse to the idea of giving extended freedom to the sector of cryptocurrency is that it believes that cryptocurrency will pose a risk to bring in the element of unscrupulousness in the market even if it seems harmless right now. Moreover, the behavior of this market in the past months has proved that there is a lot of arbitrariness that has been plaguing this field and is bound to affect the economy of the country at some point. However, the fate of cryptocurrency in India depends on the decision that the Supreme Court reaches on the 11th September, which is supposed to be the final date of this case.