Cryptocurrency Gets Green Light In India

cryptocurrency bitcoin

Recent declaration by RBI cleared all confusions regarding legality of Cryptocurrency, as RBI announced that there is no prohibition on opening of bank accounts by Cryptocurrency traders.

Crux of the Matter

Recent Reversal
In March 2020, Supreme Court of India reversed RBI’s decision of 2018 of banning regulated financial intermediaries from using cryptocurrency. However, confusion lingered among potential investors. On the demand of a Right To Information (RTI) application, RBI announced that cryptocurrency traders can be allowed to open bank accounts.

While the Supreme Court ruling had made it very clear that there are no curbs on banking for crypto businesses, the RBI reply to RTI filing is very much welcome. There has been confusion amongst many banks despite the Supreme Court ruling because these banks have been waiting for information from RBI.

Nischal Shetty, CEO of WazirX

History Of Cryptocurrency In India

  • 2012-2013: Cryptocurrency comes in mainstream observation
  • 2013: RBI cautions of it and labels it “risky”
  • 2016: Exponential increase in its use after Demonetization
  • 2017: RBI repeats concerns of 2013, with the Finance Ministry expressing concern over safety and legality of transactions
  • 2018: RBI prohibits regulated financial institutions’ dealing with cryptocurrency
  • March 2020: SC legalizes Cryptocurrency, overturning RBI’s decision of 2018
  • May 2020: RBI Says “No Prohibition” on Banks allowing accounts to Cryptocurrency traders


Crypto Around The World

  • 2008: An anonymous paper by title “Bitcoin: A Peer-to-Peer Electronic Cash System” appeared
  • 2009: Bitcoin made available to public
  • 2011: Other cryptocurrencies appear – Namecoin, Litecoin, etc
  • 2013: Bitcoin prices crash after reaching 1 Bitcoin = $1,000
  • 2014: Bitcoin exchange Mt.Gox goes offline. Loss of $450 million
  • 2017: Japan passes law legalizing Bitcoin as payment method
  • 2020: India legalizes Cryptocurrency
Curiopedia
  • Satoshi Nakamoto is the name used by the presumed pseudonymous person or persons who developed bitcoin, authored the bitcoin white paper, and created and deployed bitcoin’s original reference implementation. As part of the implementation, Nakamoto also devised the first blockchain database.
  • Libra is a permissioned blockchain digital currency proposed by the American social media company Facebook, Inc. The currency and network do not yet exist, and only a rudimentary experimental code has been released. The launch is planned to be later this year.
  • ZebPay is a cryptocurrency exchange and wallet provider headquartered in Singapore with a registered office in Australia. It is currently operational in over 163 countries, including India. In 2020, ZebPay was acquired by Rahul Pagidipati, who is currently serving as CEO, and relaunched in India with a new crypto-crypto trading feature.

Mastercard CEO withdraws from Facebook's Libra over Varied Concerns

Mastercard’s CEO Ajay Banga has pulled out from Facebook’s cryptocurrency Libra, over concerns about compliance, making money, and wallets. He reports that Libra’s leaders wouldn’t commit to observing laws, so he couldn’t see how the digital currency would make money. The social networking giant’s plan to store the coins in its Calibra digital wallets did not go well with him either.

Crux of the Matter

What is Libra ?
Libra is a global currency and financial infrastructure developed by Facebook
Built on a secure, scalable, and reliable blockchain, it is a stable coin which is backed by a reserve of assets. It is governed by the independent Libra Association and uses the LibraBFT consensus mechanism. Facebook aims to have 100 members in its Libra Association before the launch, which in on first half of 2020.

The crack in the partnership
Ajay described the lack of a clear business model as a cause for major concern, stating that he could not see the future of their vision to become profitable. The association’s members were not ready to commit to anti-money laundering or data management controls wither. Mastercard jumped ship from the project in October, along with PayPal and Visa, just as the official charter to establish the Libra Association, a nonprofit body overseeing the project, was signed in Geneva.

The red light on Libra
Libra has faced intense scrutiny in recent months as EU competition regulators continue to probe them. US lawmakers grilled Facebook’s CEO Mark Zuckerberg last year on subjects such as Facebook’s handling of financial data, its cooperation with regulators, and why it wants to develop a substitute for the dollar. The association had started with 28 founding members in June 2019, but over the months eight firms have left. Telecom major Vodafone was the latest to withdraw when it decided to focus on its own payment products. Facebook is yet to comment officially on these withdrawals.

Curiopedia

Blockchain is “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way”. It is a growing list of records, called blocks, that are linked using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data.

By design, a blockchain is resistant to modification of the data. For use as a distributed ledger, a blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for inter-node communication and validating new blocks. Once recorded, the data in any given block cannot be altered retroactively without alteration of all subsequent blocks, which requires consensus of the network majority. Although blockchain records are not unalterable, blockchains may be considered secure by design and exemplify a distributed computing system with high Byzantine fault tolerance. Decentralized consensus has therefore been claimed with a blockchain.

Blockchain was invented by a person (or group of people) using the name Satoshi Nakamoto in 2008 to serve as the public transaction ledger of the cryptocurrency bitcoin. The identity of Satoshi Nakamoto is unknown. The invention of the blockchain for bitcoin made it the first digital currency to solve the double-spending problem without the need of a trusted authority or central server. The bitcoin design has inspired other applications, and blockchains that are readable by the public are widely used by cryptocurrencies. Blockchain is considered a type of payment rail. Private blockchains have been proposed for business use. Sources such as Computerworld called the marketing of such blockchains without a proper security model “snake oil”. More Info