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[CBDC in India: What is Central Bank Digital Currency (CBDC)?]( Credits: www.jagranjosh.com The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 will be introduced by the GOI to ban trading and investments in private crypto-currencies such as Bitcoin and will provide the RBI with the legal powers to develop CBDC. As per Lok Sabha Bulletin Part II, The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 will be introduced by the Government of India to ban trading and investments in private crypto-currencies such as Bitcoin during the Budget session of the Parliament and will provide the Reserve Bank of India (RBI) with the legal powers to develop CBDC. On 25 January 2021, the Reserve Bank of India (RBI) stated that it is examining if there’s a need to introduce Central Bank Digital Currency (CBDC) in India. In case, the need for a digital currency arises, the bank will look for ways to operationalise it. In its February 2020 Bulletin, RBI cited the survey of central banks conducted by the Bank for International Settlements which revealed that around 80% of the 66 responding banks have started projects to explore the use of CBDC, including Canada, USA and Singapore. In 2019, a draft bill was prepared by Finance Ministry committee on virtual currencies which banned crypto-currency issuance, trading, investment and other activities in India a punishable offence with fine of up to â¹25 crores or with an imprisonment term of one to ten years, or both. However, this legislation was never approved by the Indian Parliament. Earlier in 2018, RBI banned financial institutions from dealing with the cryptocurrencies, leading to the shutdown of such platforms.
However, the decision was revoked after a Supreme Court order in March 2020 that allows operations revolving around cryptocurrencies to restart in India. What is Cryptocurrency? What is Central Bank Digital Currency (CBDC)? Digital currencies or cryptocurrencies are gaining popularity across the world. This has made most central banks look at launching a digital currency controlled by them to address their shortcomings while hastening the shift towards a cashless society. The Central Bank Digital Currency (CBDC) is a legal tender and liability of a nation’s central bank in the digital form. It is denominated in a sovereign currency and appears on the balance sheet of a nation’s central bank. CBDC is a digital currency which can be converted/exchanged at par with similarly denominated cash and traditional central bank deposits of a nation. In February 2019, the Finance Ministry’s committee propose the idea of introducing a Digital Rupee. Types of CBCDs: 1- Retail: Retails CBCDs are meant for use by individuals, households and corporations. 2- Wholesale: Wholesale CBCDs are meant for use by financial institutions. Significance of CBDC: The Reserve Bank of India (RBI) stated that the innovations have been rapidly changing the payments space and this has made central banks across the world examine whether they could leverage on the technology and issue fiat money in the digital form or not. Recently, RBI indicated that it is conducting a feasibility study on the development of a government-backed digital currency. What is Currency Manipulation? Here’s why the US put India again on its currency monitoring list Benefits of CBDC: At present, central banks of various nations are currently examining the positive implications that a digital currency contributes to financial inclusion, economic growth, technology, innovation and increased transaction efficiencies. 1- Real-time money transfer: Money transfers and payments can be made in real-time from the payer to payee without relying on intermediaries such as banks. 2- Easy tracking of currency: With the introduction of CBDC in a nation, its central bank would be able to keep a track of the exact location of every unit of the currency. 3- Income Tax: Tax avoidance and tax evasion will be near to impossible as methods such as offshore banking and unreported employment cannot be practised to hide financial activities from the central bank. 4- Curbing Crime: Criminal activities can be easily spotted and ended such as terror funding, money laundering, and so forth. 5- Alternative to physical cash: Digital currencies issued by central banks would provide for a modern alternative to physical cash. 6- Seigniorage income: Issuance of digital currency would avoid a reduction of seigniorage income for governments in the event of the disappearance of physical cash. Seigniorage income refers to the difference between the value of money and the cost to produce and distribute it. 7- Volatility: CBDCs will be pegged to assets such as gold and thereby will not witness any volatility as in the case of cryptocurrencies. What is the India-US currency swap agreement? Need for CBDCs in India: In May 2020, China started testing its Digital Yuan– Digital Renminbi (RMB). Several other nations have also started research and pilot projects related to CBDC such as Canada, USA and Singapore. Also, China and USA are battling to gain the supremacy across markets with the introduction of new-age financial products and India may get caught up in this digital proxy war. [Read more]( The post [CBDC in India: What is Central Bank Digital Currency (CBDC)?]( appeared first on [Feed Binary](. [Read Full Story](
------------------ [Cryptocurrency bill: Bitcoin in India trades at 20% discount to global prices]( Credits: www.livemint.com The government on Friday had listed a bill, which proposes to ban all private cryptocurrencies in India â such as bitcoin, ether, ripple â in the legislative order of business for the Budget Session of 17th Lok Sabha. The governmentâs plan to ban all private cryptocurrencies in India has spooked investors with prices of the worldâs oldest cryptocurrency bitcoin trading at a steep discount of up to 20% against a premium of 10% in the last few days. The government on Friday had listed a bill, which proposes to ban all private cryptocurrencies in India â such as bitcoin, ether, ripple â in the legislative order of business for the Budget Session of 17th Lok Sabha. The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 also stated that certain exceptions to promote the underlying technology of cryptocurrency and its uses would be allowed. âDue to the fact that a cryptocurrency draft bill leading to its ban has got listed in the items for discussion during this budget session, the entire industry is in panic. We have seen some panic selling as well, which has led to reduced prices of cryptocurrencies. Bitcoin and ether, which used to trade at 10% premium compared with global markets are now trading at 20% discount,” said Sathvik Vishwanath, co-founder and chief executive officer, Unocoin. According to the expert, cryptocurrencies didnât see any notable recovery despite the topic not coming up in the budget speech. Bitcoin was trading marginally higher on Tuesday after hitting a high and a low of $34,715.66 and $33,150.73, respectively, over the past 24 hours. It was trading at $34,265 at 1.45 pm (IST) on Tuesday, as per data available with crypto exchange WazirX. Last year, the Supreme Court of India had quashed a Reserve Bank of Indiaâs (RBI) ban on crypto-related payments. Industry experts also are hoping for government support. âThe contents of the draft bill remain unknown, which is also adding to the panic of the community. India is known for following the footsteps of developed counties when it comes to technical innovation and it is the time for governments and regulators to look at how this has played out there more closely before making knee-jerk reactions,” said Vishwanath. RBI earlier had also said that the apex bank is exploring a digital version of the rupee. âWe’re proud that the RBI is exploring a digital rupee built on a blockchain. Blockchain technology not only lowers costs, but it also improves accounting since it is an immutable ledger, which would give the government new tools to fight corruption. However, creating a government currency doesn’t require the banning of non-government crypto assets. [Read more]( The post [Cryptocurrency bill: Bitcoin in India trades at 20% discount to global prices]( appeared first on [Feed Binary](. [Read Full Story](
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