The process of payment systems differed from time to time. Such payments are used and accepted widely to satiate the want of the opposite side. The earlier usage of currency had its form only for fulfilling the wants of another person engaged in the process of a transaction. Such transactions didn’t focus on the existing value of the currency and its worth. But soon after the emergence of the financial obligations, the government decided to create some values for the currency which are in circulation. And various monetary standards and systems were introduced and the currency was valued on various aspects such as gold, stocks, commodities, and in terms of usage in the process of international business.
And thereafter the currency assumed various forms of things such as shares, paper currency, and lastly the electronic form of transfer of currency gained importance as the interest was generated and various subsidies were given within the generation of e-transfer.
But in 2009, a generation of payment was introduced by a Satoshi Nakamoto, called Bitcoin a generic way of transfer of payments and usage of currency in a virtual way. Such an invention is termed as cryptocurrency.
To be precise, Cryptocurrencies are virtual money that uses cryptographic protocols or complex code systems, that encrypt and safeguard sensitive information about data and their units of exchange. It is a new form of digital asset based on a network that is distributed across a large number of computers. This decentralized structure allows them to exist and exchange outside the control of governments and central authorities.
Those virtual goods are considered to be dangerous by some people as the experts opine that if those currencies get the prominence it will affect the finance and law sector. While others give an opinion that such type of new generation of the transaction of payment will be more secured and will reduce the process of double-spending procedure in the economy. Today, the aggregate value of cryptocurrency in the economy is more than 214$ Billion.
When coming to the arrival of cryptocurrency in India it was opposed by the Reserve Bank of India as this currency will increase the tax evasion and generation of unaccounted money. Such intervention will enable the legislature to restructure the whole of the statutory provisions which are being used for commerce and trade and banking such as Reserve Bank of India Act, 1934 and Banking Regulation Act, 1949 and Payment and Settlement Systems Act, 2007.
The prevalence of the virtual currencies was decided by the Supreme Court of India and Reserve Bank of India in 5th April 2018 by issuing a “Statement on Development and Regulatory Policies” which directed the entities regulated by RBI
1) not to deal with or provide services to any individual or business entities dealing with or settling virtual currencies
2) to exit the relationship, if they have one, with such individuals/business entities, dealing with or settling virtual currencies (VCs).
The decision of the Supreme Court was challenged by INTERNET AND MOBILE ASSOCIATION OF INDIA (Petitioner) Vs RESERVE BANK OF INDIA (Respondent) in Writ Petition (Civil) No. 528 of 2018 stating that they seeking a direction to the respondents not to restrict or restrain banks and financial institutions regulated by the Reserve Bank of India from providing access to the banking services, to those engaged in transactions in crypto assets. The petition was taken into consideration and the liability was set aside by the Supreme Court and ordered to defreeze all the trading accounts.
The review of the 180-page judgment given by the Supreme Court reveals that the premises of the verdict are not in alignment with what the industry has assumed in its petition.
In a simple way of understanding, the entire judgment places its importance on the violation of one of the core fundamental rights of the Indian Constitution – Article 19 (1) (g), which guarantees the freedom to practice any profession. The Supreme Court concluded that the Reserve Bank of India’s measure violated Article 19 (1) (g) for virtual currency exchanges, and the prohibition measure was not proportional to the threat. The verdict also concluded that the Reserve Bank had not substantiated the threat with empirical data or credibly examined alternative measures which are not satisfactory and convincing to the issue.
However, one of the reasons the Supreme Court supported the industry was because there was “no law banning virtual currencies yet,” which implies the verdict would not stand once there is such a law.
The state of Telangana, having its Capital in Hyderabad, has covered and remodified an entire area as its “blockchain district,” and providing infrastructural gears for the blockchain start-ups. Tamil Nadu, has announced an ambitious blockchain backbone on e-governance, which could be one of the largest projects in the world, covering 10 million citizens. All these states are engaged in the process of regulation with the federal government through internal channels.
In conclusion, a doubtful nature is created in the minds of the people brooding over the introduction of cryptocurrency with statutory rules and its aftermath on the functioning efficiency with the government. However, due to the size and democratic structure of India, the process for restructuring the growth of cryptocurrency through various legal channels is expected to get started, with opinions on both sides of the fence.