Cryptocurrency/Electronic Currency/Digital Coin

INTRO:

-Crypto currency are the digital or alternative currencies that don’t have any physical form.

-Cryptography is used for such currency to make secure transactions. In this transactions information converted into such code which is uncrackable.

-Usually Crypto currency is not controlled by any country, so the value is determined by the market.

ORIGINATION:

• BITCOIN, The first and still most important crypto currency, never intend to invent a currency.
• Satoshi Nakamoto, the unknown inventor of BITCOIN, in his announcement in late 2008, he said he developed “A Peer- to –Peer Electronic Cash System.”
• This decision became the birth of cryptocurrency.

CRYPTO-CURRENCY- Market price as at 21 may 2021 (in (in Rs.)

CRYPTO CURRENCY-MARKET CRASH –EXPLORING THE REASON

• The cryptocurrency market Wednesday saw a big correction with prices of major currencies, including Bitcoin, Ethereum, BNB and others crashing as much as 30% within 24 hours. This came in the backdrop of Chinese regulators Tuesday announcing a crackdown on cryptocurrencies.
• China’s Announcement on Crypto Currency:

> China has barred financial institutions and payment companies from providing any services related to cryptocurrency transactions. This means that banks and online payments channels must not offer clients any service involving cryptocurrency, such as registration, trading, clearing and settlement.

> China had issued such a ban in 2017 as well, but compared with the previous ban, the new rules have expanded the scope of prohibited services, and surmise that “virtual currencies are not supported by any real value”.

• Another reason for downfall of Crypto Currency:

> Announcement made by TESLA’s CEO Elon Musk that electric car maker would not be accepting Bitcoin as payment.

CRYPTO CURRENCY-MARKET CRASH –what next

• What’s the Government Stand:

> The Ministry of Corporate Affairs (MCA) has made it mandatory for companies to disclose crypto trading/investments during the financial year. Experts see it as a positive step and expect the taxation rules to follow through. This is being considered as the first step towards regulating cryptocurrencies in India. Finance minister Nirmala Sitharaman has said the Centre was open to experimentation with new technologies and is not closing its minds for them.

> Cryptocurrencies are not illegal in India. So if you want to buy, let’s say Bitcoins, you can do so and start trading in it. However, India does not have a regulatory framework to govern cryptocurrencies as of now.

> However, the Centre had flagged reservations around its misuse and wanted to put a blanket ban in India.

• Taxability of cryptocurrency:

> Yes, Cryptocurrency transactions are taxable in India in cases where the person earning such gains is an Indian tax resident or where the crypto is said to be domiciled in India.

• Ban on Bitcoin trading:

> Rajya Sabha member Sh. Sumalatha Ambareesh asked whether illegal trading of cryptocurrency is going on in the country? Sh. Thakur replied legal position on cryptocurrency and what it is planning to do.

> In all the government responses in the Parliament mentioned above, it is clear that the government is not completely against cryptocurrencies. And this augurs well for crypto lovers, at least for now.