Cryptocurrency is a platform that has led to a lot of innovation in the monetary digital world. The initiating time for this digital cryptocurrency was in the year 2009 when a global crisis that people faced was due to the collapse of one of the biggest financial institutions.
The world had to forcibly dive into this recession. People had faced a lot of financial duck ups. Many had lost their jobs and many others had to leave their job because of the incapability of the employers even to disburse the salaries.
This is when the concept of this virtual currency was laid in this digital world, through publishing a white paper entitled ‘Bitcoin: digital cash’. This currency has faced a lot of resistance just like the internet, but now if we see, passing an hour without the internet feels a waste so is the cryptocurrency.
In India it is because of the govt that has not allowed free trading in cryptocurrency, that is why people are hindered to invest in cryptocurrency, but recent trends have shown that people are trusting in cryptocurrency and they are also investing in it, finding it a feasible as compared to the other banking mechanisms that include a lot of paper formality, the physical appearance of the person and whatnot.
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What has Happened Recently
Recently two banks, HDFC and SBI sent an official warning through emails, and texts to their customers to not trade or invest in cryptocurrency and also to not let other people indulge in cryptocurrency. They have referred to these warnings as per a 2018 circular issued by the RBI where any dealings in cryptocurrency were held as illegal.
They have further warned their customers that if they are found unanswerable to the crypto transaction, their credit card and other transactions would be restricted, even other banks did a similar thing. But a complaint was filed in this regard and RBI was asked to direct the banks with information as to the crypto trading.
To this, the SC in 2020 had struck down these guidelines with the judgement stating that RBI has no substantial pieces of evidence to adduce that talks about cryptocurrency's impact on India's financial system.
The Next Step
The big cryptocurrency exchanges like COINdex, wazirX, coin switch Kuber, all these big platforms are collaborating with the Internet and Mobile Association India (IAMAI) and are together forming an advisory board. The purpose of this advisory board formation is to make a ‘CODE OF CONDUCT’ concerning India’s crypto industry.
As we know a circular that was issued by RBI in 2018 asked all the banks not to follow the circular. It was an effort to resist people to deal in cryptocurrency. After all this, these big Indian exchanges thought of making a legitimacy program. The advisory board will be set up under Blockchain and Crypto Assets Councils. This council is one of the parts of this IAMAI. The board will work as a self-regulatory organisation in this sector. The code will include:
- Standardized annual audits
- Funding of the company
- Company’s information Routine disclosure
- KYC
- Improved data storage standards
- Assessment of customer’s risk profile
The board prepares a mechanism through which the mentioned criteria is followed for exchanges. They have emphasized regulation and supervision to be balanced for substantial growth.
CONCLUSION
I hope the article would have told you about India's current cryptocurrency trading status. Although there are restrictions, it is not illegal as there are no shreds of evidence that proves that its usage has created any financial constraints in the Indian financial system.