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What is Cryptocurrency?

Cryptocurrency is a kind of payment that may be used to exchange products and services via the internet. Many businesses have created their currencies, which are referred to as tokens, which can be exchanged for the goods or services that the firm offers in exchange for the tokens.[1] Consider them in the same way that you would consider arcade tokens or casino chips. To obtain access to the good or service, you will need to swap actual money for bitcoin.
Blockchain technology is used to facilitate the operation of cryptocurrencies. Blockchain is a decentralized technology that handles and records transactions over a large number of computers that are distributed across the internet. The fact that this technology is secure contributes to its popularity.
The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, which is scheduled to be introduced in Parliament’s Winter Session, which begins on November 29, seeks to “create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India,” according to its official website.[2]
In its current form, the Bill “seeks to prohibit all private cryptocurrencies in India; nevertheless, it provides for specific exclusions to promote the underlying technology of cryptocurrency and its applications.”
Prices of cryptocurrencies on local exchanges plummeted overnight when the news broke, even though they stayed essentially steady on worldwide markets during the same period. Cryptocurrency investors were believed to be in a state of panic, fearing a ban or restriction on their assets. India does not yet have any laws or regulations in place regarding cryptocurrencies; nonetheless, the definition and regulation of virtual currencies in different countries are vastly differing.
To what extent are virtual currency exchanges governed by national laws around the world?
Countries and regulators have taken a variety of positions on virtual currency trading, ranging from outright banning it to allowing it to operate under certain limitations.
Even while governments and authorities disagree, there is no consensus on whether bitcoin should be classified as a currency or an asset, or how it should be managed operationally. Policy and regulatory responses have been inconsistent, with no clear coordination amongst countries’ measures.
Regulators and policymakers can take a variety of approaches, as illustrated by El Salvador’s acceptance of bitcoin as legal money and China’s strict regulations on both cryptocurrencies and service providers.
After a period of legislative and regulatory experimentation, countries like India are still figuring out the best method to handle cryptos. US and EU efforts to define the regulatory mission are ongoing, but both countries have been vigorous in their efforts.
There are several ways to regulate cryptocurrencies, but it is reasonable to say that India is among the most restrictive. According to media sources on what the Government plans to propose in the crypto legislation, this status is not expected to change much. Nonetheless, let’s take a look at the legislation for cryptocurrencies in big economies and groups to see how India stacks up.
United Kingdom
The United Kingdom, like many other countries, does not have a comprehensive law on cryptocurrency regulation at this time. Currently, the Financial Conduct Authority (FCA) is the entity in charge of issuing licenses to authorized cryptocurrency-related enterprises, including crypto exchanges. Applicants for a license from the Financial Conduct Authority (FCA) must adhere to a strict set of regulations. Companies that engage in crypto futures and options face further scrutiny under these restrictions.
For tax purposes, the UK treats cryptocurrency trading as though it were a form of currency trade. A company that deals in currency trading, or a cryptocurrency exchange, is subject to corporate taxation.
Nonetheless, the Financial Conduct Authority (FCA) is aware of the hazards associated with cryptocurrencies. Like the Reserve Bank of India, it has warned investors in the United Kingdom to exercise caution in their investments.
United States
The United States, like India, has a dual legislative system in which the federal and state governments each have the authority to legislate. Bitcoin regulations differ from state to state in the United States; however, the country as a whole has favored all cryptocurrency activity.
An example of a favorable legislative climate can be seen in New York. BitLicense, a framework for regulating cryptocurrency firms and exchanges, was introduced by New York City in 2016. The New York State Department of Financial Services (DFS) has implemented a licensing system for organizations that want to transfer, keep, acquire, or sell cryptocurrencies.
Other US states with favorable regulatory environments for cryptocurrency include Wyoming, which exempted cryptocurrency creators and sellers from securities rules in 2018 as long as they met specific requirements.
 
European Union
Lawmaking in the EU is a multifaceted issue, with certain issues handled by individual countries and others by the EU as a whole. Each EU country has so far regulated cryptocurrencies, with the majority opting for a light regulatory framework. The EU, on the other hand, is considering establishing a unified framework for cryptocurrencies. Draft law titled Markets in Crypto-Assets Regulation was released by the European Commission in September 2020. (MiCA)
Bitcoin and other virtual currencies will be classified as financial instruments and subject to regulation under the new proposal, which is currently under review. As with other financial instruments, a regulator’s prior authorization is required for any company that intends to hold, trade, provide brokerage services for, or give investment advice on, cryptocurrencies.
Among the most intriguing aspects of the draught is that it takes into account the many forms of crypto-tokens, such as crypto-assets, utility tokens, asset-referenced tokens, and e-money tokens.
China
It’s been a bumpy trip for China in its relations with cryptocurrencies. Since its inception, it has become one of the most restrictive crypto markets in the world, particularly regarding mining. About 75% of the world’s crypto-mining was done in China as recently as September 2019. A prohibition on cryptocurrency mining in June 2021 is expected to reduce worldwide mining activities by 40%, according to some reports.
Before the ICO ban in 2017, China ordered the closure of all crypto-exchanges, as well. Legislators, on the other hand, have not made it illegal to own or trade in cryptocurrencies, despite their major complaint being with ICOs. Similar to India, the Chinese government has shown a lot of interest in blockchain technology and has fostered the creation of blockchain startup companies.
A digital Yuan, China’s official fiat currency, is among the most advanced in terms of implementation. Real-world trials have already begun for the cryptocurrency, which will be centrally regulated, but which is expected to operate differently from the usual fiat money.
Conclusion
The Reserve Bank of India (RBI) has maintained a very cautious stance regarding cryptocurrencies, to ban them. While the ban was repealed, the central bank’s declared attitude has not. The Indian government, on the other hand, is pursuing a twin strategy of supporting the use of blockchain technology while enforcing strong controls on cryptocurrencies.
References:
[1] https://www.nerdwallet.com/article/investing/cryptocurrency-7-things-to-know#1.-what-is-cryptocurrency
[2] https://indianexpress.com/article/explained/cryptocurrency-and-regulation-of-official-digital-currency-bill-rbi-parliament-winter-session-7639969/

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