Crypto Safe Hai! Analysis of Proposed Bill to Ban Private Cryptocurrencies

Timeline of RBI v/s cryptocurrency exchange since 2018

The Reserve Bank of India and cryptocurrencies have not had an easy relationship for the past few years. In April 2018, the Reserve Bank of India passed a de-facto ban on Indian banks preventing them from working with cryptocurrency exchanges. The banks were given 3 months to wrap up the business dealings with exchanges. With INR access, cut off at the source, Indian exchanges started to crumble. However, CoinDCX was one of the few exchanges that emerged with its specialized products which made thousands of investors and traders invest in cryptos around India put our trust in us. 

CoinDCX was one of the few exchanges that banded together with the Internet and Mobile Association of India (IAMAI) and filed a petition challenging the de-facto ban in the Supreme Court. After nearly a year of adjournments, the Supreme Court overturned the banking ban and allowed cryptocurrency exchanges in India to work with Indian banks. Within six hours of the judgment,  CoinDCX became the first exchange to integrate banking transfers of all our users. 

Analysis of Proposed Bill to Ban Private Cryptocurrencies

Late last month, the official website of Lok Sabha, mentioned on the bulletin board that one of the agenda for the upcoming Budget Session would be ‘The Cryptocurrency and

Regulation of Official Digital Currency Bill, 2021’. 

The synopsis of the Bill read, ‘To create a facilitative framework for creation of the official digital currency (CBDC) to be issued by the Reserve Bank of India. The Bill also seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.’

We assure complete safety of your funds before, during, and even after the bill has been passed by the government in both the scenarios – the ban has been discarded or implemented. Your investments are safe!

.. (2/7)#Bitcoin is a fully public cryptocurrency. This means that anyone can have access to the entire source code at any time. No organization or individual can control Bitcoin. It is practically impossible to ban #Bitcoin.

— CoinDCX: India’s Largest Cryptocurrency Exchange (@CoinDCX) February 2, 2021

..(4/7)

The bill mentions RBI planning to launch its own Central Bank Digital Currencies (CBDCs),showing #India is open to technological innovation. We’re working with various experts to integrate similar innovations in India’s crypto landscape.This is some great positive news!

— CoinDCX: India’s Largest Cryptocurrency Exchange (@CoinDCX) February 2, 2021

.. (7/7)
We have deployed some strong counter measures and will continue building on our plans in this direction, so that every crypto market participant is assured irrespective of the outcome of the proposed crypto bill. #StayTuned to know more. Happy Investing! #TryCrypto

— CoinDCX: India’s Largest Cryptocurrency Exchange (@CoinDCX) February 2, 2021

You can check the full tweet here. 

The bill is currently in the introductory stage and it will pass through the official procedure of multiple approvals. Just like any other bill, till it becomes law.

The bill broadly covers the RBI planning to launch its own Central Bank Digital Currency (CBDC), we received the first indication of it last week. Second, the Govt. is considering banning private cryptocurrencies barring few exceptions. With regard to CBDC, this is an encouraging sign as the Indian government is open to integrating technological innovation with blockchain at a large scale. 

The government considering banning private cryptocurrencies is the second point. Notable points are private and few exceptions. While there is no official label of private cryptocurrencies recognized elsewhere, it is important what the bill will be classifying private as.

There is no need to panic about the bill as the clarity is still yet to be given by the government. Investors in India can continue to invest in cryptos like they were doing usually. All the funds invested in cryptocurrencies using CoinDCX’s platform are absolutely safe.

CoinDCX assures its users that it fully backs their investment and remains committed to ensure that users don’t face any issue in regard to the same. It also becomes essential to understand that even though India is an important player in the crypto market and we as one of the leaders in the space, will always be at the forefront in protecting your funds. Cryptocurrencies are global markets that are open 24×7 with millions of traders active around the world. The price of the cryptocurrencies are decided by the traders themselves, and not any centralized entity. Hence, we recommend users to hold on to their crypto assets and don’t take decisions in rush culminating from a market panic.  With our advanced technology and partnerships with various technologies around the world, we will make sure you get the best rates of returns on your investments. 

CoinDCX’s specialized liquidity-aggregation model from the world’s leading exchanges like Binance, Huobi, and OKEx, the majority of our top liquid order books will remain untouched. Even in the worst-case scenario when the ban is implemented, all your funds will still remain safe and you will be able to sell cryptocurrencies for INR for the market price. We will make sure that there is guaranteed availability of buyers of your cryptocurrencies even if that buyer has to be us, and hence, we assure you that at present, you can still continue to invest, trade, and make profits in cryptos legally without any hesitation. But this is a scenario when the bill is implemented. Currently, there is no clarity about the bill and a long sequence of steps is pending before it becomes law.

Globally,  cryptocurrencies such as #Bitcoin, #Ethereum are considered public cryptocurrencies because of their open and public nature, where any participants can watch, confirm, and verify the transactions. Given that the Indian government has not clarified what exactly it means by, ‘private cryptocurrencies’, the leaders of India’s crypto community is on initiating the discussions with the government and helping them understand the decentralized and public nature of public blockchains along with how other countries are regulating their trading with licenses, KYC/AML practices, and a well-structured rulebook. 

Our CEO, CoinDCX welcomes this bill as a positive step for India’s crypto landscape as it opens an opportunity of dialogue and discussion with the GOI to create a regulatory framework for India’s emerging crypto startups.

2/4 Now, with the crypto bill being brought into Parliament, we at @CoinDCX along with industry stakeholders will continue engaging with key stakeholders and this is where we will work with the government as an industry player and will help in all open and direct directions.

— Sumit Gupta (CoinDCX) (@smtgpt) January 31, 2021

4/4 To all industry participants, it is time we should continue our united efforts and contribute in each of our capacity.

The efforts that we will put in today will help to bring the crypto revolution in India. 💪 🇮🇳

— Sumit Gupta (CoinDCX) (@smtgpt) January 31, 2021

The reactions that floated when the news broke first, included possibilities of the fate of cryptocurrency exchanges and potential financial regulations that could arise during Budget 2021. Questions ranging from ‘Are Bitcoins illegal in India’ to ‘How Safe Are Cryptocurrency’ were some of the burning narrative-setting questions that floated around the cryptosphere. 

Naturally, this created a flurry of unrest among the cryptocurrency users, and the mainstream media dove in headfirst, to uncover the breaking news. However, there are several legitimate questions that the community has put forward and here, we have answered all of them for you:

Is Cryptocurrency Banned in India?

No! Cryptocurrencies are not banned in India, nor they are illegal. Cryptocurrencies are digital or virtual currencies that are able to operate as a medium of exchange at a person-to-person level, enabling direct payments between individuals.  It uses cryptography to secure and verify transactions as well as to control the creation of new units of a particular cryptocurrency. They operate on decentralized platforms which means it is not controlled by any central authority: the decentralized nature of the blockchain makes cryptocurrencies theoretically immune to the old ways of government control and interference.

The crypto ecosystem in India has been through a rough patch in the year 2018 – when the RBI banned banks from providing services for the trading of all virtual currencies. The inability to use Indian banks for their operations led to a near wipe-out of all crypto companies and startups. But soon enough, in March 2020, the verdict by the apex court that overrules the central bank has given the sector their much-needed respite. In a ruling passed in March 2020, the Supreme Court lifted the ban, and further plans to regulate cryptocurrencies were underway.  In this entire span (from 2018 to the present), trading cryptocurrencies have never been illegal in India. On the contrary, 2020 has been the most exciting year for India’s crypto landscape witnessing tremendous growth in the number of investors who have started trusting Bitcoin as an alternate asset class. CoinDCX has been the first exchange to be able to provide a smooth transaction facility to its customers with its variety of products like CoinDCX app and Insta. With the mass adoption and the grand success of the #TryCrypto movement initiative, there cannot be a more fabulous time for investors!

Cryptocurrencies are by nature, completely decentralized and the transactions within the medium take place on decentralized ledgers called blockchain. Cryptocurrencies are perfectly capable of being used for various transactions all over the world, including India. That being said, there is no ban on cryptocurrencies in India. 

To learn more, click here.

Are Bitcoins illegal in India? 

No, trading Bitcoin is not illegal in India. The RBI circular in 2018 banned the banks to be of any service to the digital decentralized asset class. The ban was lifted when the Supreme Court overruled their claim in March 2020. 

2020 as a year has seen exponential growth in the crypto space. Mass adoption, various questions asked by the people new to crypto and investors who previously dealt with the centralized fiat medium. It was in March of this year that the Supreme Court passed a ruling that turned the tables in the favour of cryptocurrency exchanges. While trading of cryptocurrency was always legal, it was not allowed for banks to provide services to crypto companies, thus making it impossible for investors to trade in crypto-to-INR pairs. 

The demand for cryptocurrencies and various queries around the same is at a very happening stage but, at times, the concerns and the market can be volatile and furious. New coins are launched while some old ones die out, some early investors make big profits while some traders suffer losses. It is, therefore, important to bear in mind that money will be both gained and lost while trading in the market. Crypto being a new area, the laws surrounding it keeps evolving. This can lead to the creation of new opportunities that the early adopters can benefit from. 

With all the factors in favor of the Indian investor, this is the perfect time to buy Bitcoin in India. In the years to come, the cryptocurrency market is only likely to get more competitive. In a market like this, the key is to enter at the right time. Investing now can mean better returns as the price increases due to optimism and stabilization as cryptocurrencies become more popular. 

How safe is Cryptocurrency? 

The safety measures surrounding Cryptocurrencies are always getting upgraded. With the rising demand, the safety of digital assets is always given priority at CoinDCX. With industry-best services at our customer’s disposal, we can assure you safety without a second’s thought. 

Cryptocurrencies being run by blockchain technology ensures that the transaction stays secure once done. With the decentralized medium, there is no human control over the exchanges or transactions taking place inside the blocks. 

We would like to highlight that CoinDCX is one of the most secure and safe exchanges both in India and across the globe. At CoinDCX, the security of the digital assets and the private information of our clients is paramount. Our platform is built with industry-leading security protocols that are regularly tested to check for any violations. The majority of your cryptocurrencies are stored in geographically distributed multi-signature cold (offline) wallets which are disconnected from the world of the internet, and thus the cyberattack. 

Read More – CoinDCX remains committed to the security of your funds.

We would like to assure our customers that all funds remain safe at CoinDCX and our teams are always actively looking into all measures possible, to help our customers and any investors, like yourself, in this regard. We are highly vigilant for any suspicious activity and would remain alert. In the meantime, we would also like you to stay calm, wait for more clarity on the bill with us, and invest confidently without any hesitations.