History of cryptocurrency
2008: A paper titled ‘Bitcoin: A Peer to Peer Electronic Cash System’ was published by a developer by the name of Satoshi Nakamoto.
2010: The first sale of an item using Bitcoin took place, with a customer swapping 10,000 Bitcoin for two pizzas. This attached a cash value to the cryptocurrency for the first time2011: Other cryptocurrencies began to emerge, including Litecoin, Namecoin, and Swiftcoin.
2012-2017: Cryptocurrencies steadily gained traction. The price of Bitcoin shot up from around $5 at the start of 2012 to almost $1,000 at the end of 2017. This period also saw mushroom growth of cryptocurrency exchanges in India, including Zebpay, Coinsecure, Unocoin, Koinex, and Pocket Bits.
Dec 2017: The RBI and the Ministry of Finance issued statements on cryptocurrencies. The ministry compared them to Ponzi schemes. They issued more such statements but the status quo remained.
April 6, 2018: Suddenly, everything changed. The RBI issued a circular preventing commercial and co-operative bank, payments banks, small finance banks, NBFCs and payment system providers from dealing in virtual currencies This made Crypto exchanges unable to access banking services in India and their businesses crippled overnight. Trading volumes fell by 99% by August 2018
May 15, 2018: Faced with an existential threat, several Crypto exchanges filed writ petitions before the Supreme Court, challenging the action of the Government.
July 2019: The committee constituted for the purpose submitted its report to the Government recommending a ban on “private cryptocurrencies” in India.
March 4, 2020: The Supreme Court struck down RBI’s banking ban on crypto, terming the April 6 circular unconstitutional. One of the SC’s reasons for overturning the ban is that cryptocurrencies are unregulated but not illegal in India. A decaying crypto market jolted back to life. Exchanges saw a sharp increase in interest as the SC ruling coincided with a crypto boom. The price of Bitcoin jumped more than 700% between April – 2020 and February 2021
Many Indian techies get paid in crypto; say it’s faster and easier. International crypto companies are hiring engineers and back-end developers in India as contractors and paying them in cryptocurrencies to accelerate their adoption and bypass local taxes and laws regarding cross-border payments. India still lacks a regulatory framework on cryptocurrency, which means they are technically neither legal nor illegal. Legal experts said, however, that accepting payment in cryptocurrency falls in a legal grey area and that such transactions could be in violation of the Foreign Exchange Management Act (FEMA).
Many of the entrepreneurs said that “We can treat all cryptocurrencies as foreign currencies and regulate them under the existing foreign exchange management policy. Allow it to happen till a certain limit (250K $as remittance under FEMA) until we can figure out how to weed out the bad actors and promote the good ones.”
A ban on cryptocurrencies like Bitcoin may result in wealth erosion for about 1 crore Indian investors. Cryptocurrencies have been widely accepted by nations as an Instrument for economic growth and Innovation. Blockchain experts are moving to countries where crypto is regulated, such as Switzerland, Singapore, Estonia, and the US. Cryptocurrencies are to be regulated and not all the windows are to be shut. Experts say that India is required to bring clarity in terms of the regulatory framework. Rise of the Black market India needs smart sensible crypto regulations that can contribute to overall growth.
(Source: Economic Times)