Can a small coin make huge noise in the globe? Yes. It is crypto!
The entire global financial market has been raising concerns over the new age currency – Crypto. It is encrypted currency found in digital shape; not in any material format.
What are Crypto?
Crypto is the encrypted digital currency which makes it most secured as data cannot be read by so easily. It is reported that there are many crypto currencies such as Bitcoin, Altcoin, Litecoin, Ethereum, etc. Since bitcoin is being used extensively, it has gained the popularity.
Should it be called as ‘currency’?
Any form of currency should be generally acceptable and should justify as medium of exchange. In case of crypto, it is not completely accepted by regulators, hence calling it as currency would be not so logical and legal. Yet, it is popularly branded as digital currency.
Is crypto regulated in India?
At present, there are no laws to regulate crypto currencies in India. Hence, the legal status of crypto currencies is unclear and worrisome.The RBI and MoF concerns are regarding impact on macro-economic and financial stability. It is likely that SEBI will be empowered to monitor and regulate crypto in near future.
Is crypto ‘legal tender’ in India?
A legal tender means that the currency is permitted legally to use as medium of exchange. It means that people can buy goods in exchange of currency.
Issues around crypto: –
# Regulatory Issue:
Investor’s confidence is more safeguarded if the financial product is being regulated. In case of crypto; at the moment there are no regulatory bodies to monitor and regulate the transactions. This is the growing issue raised by many investors about crypto. The new crypto currency framework might empower SEBI to monitor crypto transactions in India. Whether SEBI will consider crypto as an asset; tax implications; KYC, etc are some of the growing concerns revolving around crypto currencies.
# Security Issue:
Crypto currencies are operated on blockchain technology which makes any data to be modified is not possible. Though it is highly secured; there are cases where accounts have been hacked. Breach of data and stealing currency have been the biggest challenges. Investors would be worried about safety of investments and capital appreciation of crypto.
# Complexity Issue:
Even a layman investor has the ability to understand how the stock market works, what determines the price fluctuation of a stock and so on. Whereas, understanding the working operation of crypto currencies is complicated. Assessing the risk element and hedging is highly complicated in case of crypto currencies.
The way forward crypto currency is challenging, uncertain, disruptive, yet remarkable. Because whether crypto will be legally welcomed into mainstream financial system or not is worth watching. Unless the crypto is brought into regulatory mechanism, the confidence of investors into crypto cannot be safeguarded or restored.
Some of the crucial areas such as issuing and backing agency for crypto, payment and settlement mechanism, security, privacy and financial stability should be properly addressed as part of the regulation to make crypto more secured and legal tender.