Why is the RBI Governor’s Concern About Cryptocurrency Not Justified?
The governor of RBI lately expressed his concern regarding the utilization of cryptocurrencies. According to the governor of The Reserve Bank of India, cryptocurrency trade might have an adverse effect on financial stability, thereby impacting the overall economy. As per his comment, the governor is lately engaged in communication with the government, thereby hoping for the government to take a call, hence taking cryptocurrency trading into consideration.
In the past, the Government of India on many occasions has expressed concern regarding digital currencies, thereby claiming that they can be utilized for terror funding purposes, hence laundering huge quantities of money. However, is all of it true? Is the concern justified? Let us begin with a recap.
Also Read: India’s Crypto Investors Weigh Options Ahead of Impending Ban
What Happened Earlier and What Has it Led to?
Initially, the Reserve Bank of India had banned financial entities and banks under its jurisdiction from offering services to businesses trading or dealing in cryptocurrencies during April 2018. These digital currencies were claimed to be utilized for fraudulent activities. The circular arrived just one year after Bitcoin garnered immense popularity among Indian traders. It was subsequently challenged within the supreme court by numerous cryptocurrency trading agencies within the nation. The circular by the Reserve Bank of India was struck down, however, just concerning businesses or entities working with cryptocurrencies. As far as the Indian Crypto exchanges are concerned, it happened to be a Landmark decision.
In this case, the circular by the Reserve Bank of India happened to create a disconnection between the cryptocurrency exchanges and the banking sector according to the supreme court. It was also noted that the Reserve Bank of India had not discovered any sound evidence regarding the operating systems of these cryptocurrency exchanges. Although the judgment provided relief, however, numerous Crypto exchanges have been summoned for better regulations concerning digital currency trade for fixing the current problems.
Presently, the government plans to introduce a cryptocurrency regulation bill in 2021 for banning individuals and organizations from Crypto trading. However, Crypto analysts are still skeptical about its full effect in India.
The Best Thing — Crypto Trading Remains in Full Focus
Notable crypto trading exchanges in India have witnessed a sharp increase in their number of user registrations, thereby leading to the healthy growth of trading volume. For the maximum regions of pandemic ravaged 2020, conventional investment avenues became a big hit and influenced numerous investors. Similarly, cryptocurrencies like Bitcoin begin garnering popularity after an entire collapse of 2 years. It has exceptionally performed well since the last year thereby gaining a lot.
Concerning the last year, Bitcoin, along with some additional cryptocurrencies, has seen a sharp rise in its valuation because of higher interest and investments among novice traders throughout the world. Various high-value investors additionally have joined the crypto race and invested in the future of currency.
Benefits of Cryptocurrency Trade
Professional states that the best part regarding cryptocurrencies highlights that day comes with a huge potential to hedge against inflation. The importance of cryptocurrencies is dependent on demand, unlike conventional currencies, and does not happen to be affected by currency fluctuations that are inflation-driven. For instance, only a finite quantity of Bitcoins exist globally and the value only increases when its demand enhances. According to cryptocurrency investors, Crypto trading happens to be much more secure than traditional investment forms and generally provides better privacy when it comes to the investor.
Significant Indian cryptocurrency exchanges have successfully made this point numerous times in the past. In light of this, the monetary gains post-investment have remained better at least for the previous 10 to 12 months. This can be considered as one of the strongest reasons to support cryptocurrencies.
Wrapping Up
Considering each of the facts highlighted above, the concern of the governor of the Reserve Bank of India is not justified. Moreover, at the same time, cryptocurrency enthusiasts state that maximum issues can easily be fixed worldwide governments regulate cryptocurrency trade.
