The Prominence of Cryptocurrency Encompassing the Pandemic

Keerthana Raavi*

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Introduction

Centered on blockchain technologies, cryptocurrency is decentralized digital money. The transfers occur solely as digital inputs to an electronic ledger recording individual transactions instead of physical money that is passed about and traded in the actual world. While this concept seems fairly eccentric, it is a variable that ferries people towards an easier standard of living. Many nations, such as the United States and Argentina, have exploited this creation to their advantage by legalizing and regulating its usage, while others like India have outlawed it. Nevertheless, the apex court overthrew the ban[Internet and Mobile Association of India v. Reserve Bank of India, (2020 SCC Online SC 275)] foisted by the Reserve Bank of India on 4th March 2020.

An economy is the heart of a nation due to its nexus with every social environment component. As an unfortunate consequence of the pandemic, the economy throughout the world has been sprinting like a roller coaster that only goes down. In light of the contemporary events, with the new strain of COVID-19 being found in the UK and the stock markets still crashing, the legalization of cryptocurrency in our country is much needed. The events mentioned above gave rise to and revealed the void present in our very own legislative structure that ascertains the cryptocurrency’s regulation in India. This article will peek behind the legal curtain to entail the dynamics of cryptocurrency, especially under the current economic status, and will argue why virtual money is the future.

Contemporary Momentum of Virtual Money

Bitcoin is one of the most famous inceptions of internet currency, and since its establishment, it has been spreading its wings at a global level. Contrary to the exposure of such a futuristic concept, only about half of the countries welcomed the technology with open arms, and a few even accommodated it in their municipal systems[1]. In India, the government created an Inter-Ministerial Committee in 2017 to study virtual currency's inefficacies and posit the required action. Though the committee found the distributed-ledger technology very advantageous, it suggested banning private cryptocurrencies due to the fact that the identities of these private individual creators are not of public knowledge, and it has no fixed nominal value coupled with high risk and volatility in their prices.[2] Following this event was the prohibition of financial institutions from offering assistance in terms of cryptocurrencies by the circular issued by RBI on April 6, 2018[3]. The RBI circular was challenged by the Internet and Mobile Association of India[4] (IMAI) in the Supreme Court of India. It soon was dismissed and rejected, as the court did not find the essence of a legislative direction in the circular. In our already growing economy, the usage of virtual money would have only boosted it as investment rates would sky-rocket. By smart regulation of laws, the government can gain extra tax money, which can, in turn, be used to develop our nation. It could have been a win-win situation for everyone.

Schrödinger’s Cat

Being axiomatic that the pandemic is still going on, it may be a predicament that the dooming economy can not be saved. Contrary to such belief, legal regulation of Bitcoin and other virtual resources can still save the day. COVID-19 has crushed many plans and dreams, except for those who possess virtual currency as the exchange rates spiked. If we take into account the possibility of said technology’s legalization, our economy will get back on its feet at a much faster rate. Due to coronavirus, economists say that we have gone back several decades in monetary terms as the economy crashed three times worse than the 2008 financial crisis. Despite the high exchange rate of virtual currency, investors will still be ready to pounce on the technology as soon as it is made legal. One of the sole reasons for this is the discovery of a new strain of the virus which has now travelled across the world to strike India. This mutant virus provides a reason to believe that the exchange rate would further spike, causing a huge surplus gap. Now, these are just assumptions as no one can predict the future accurately; maybe the Simpsons can, but who is going to believe a cartoon? So this puts us in the same position as Schrödinger’s cat. This physics analogy talks about the equal possibilities of any of the two results a situation can present. Therefore, there is an equivalent prospect that it may or may not happen.

Change is inevitable

Let us try to picture a future without corona from a financial standpoint. The talk of the town is that everything is going to be digitalized as modernization is inevitable, especially due to a revolutionizing pandemic. The existence of a potential development where everything is online and controlled in an auto-pilot mode can be threatening to the current organizations as many will go out of business if this becomes the new reality. As old businesses go out, new ones will be born, as adaptation is a survival skill. Soon people will be able to control their financial assets from a single online platform. Banks will transform into one big bank where all the money is being managed, and all the transactions take place through artificial intelligence platforms that coordinate and act as an intermediate between the customer and the main financial institution of the society. The most popular virtual currency, Bitcoin, will be the King of money as every organization will add it into their balance sheets. A complete revolution will take place as a new monetary standard emerges. Change is inevitable, so we might as well accept and cherish what is to come for us than sitting back to wonder what went wrong.

Conclusion

The global exposure of cryptocurrency will only increase in the coming years as governments would soon realize that it is the main way to fruitfully save their currently drowning economies. The Reserve Bank of India, instead of completely disregarding the idea, can move on with an open mind and cleverly exploit the technological advancement to the fullest by introducing their sophisticated virtual currency while keeping in mind the issues that were pointed out by the Inter-Ministerial Committee Report of 2017. This step would aid in the ‘Digital India’ mission as well. The government can pass a bill that strictly regulates the usage and operations of cryptocurrency and gain access to more income as they can collect taxes from online transactions. Nonetheless, we have to keep in mind the drawbacks of using virtual money as it has no physical boundaries. To sum up, the regulation of the said concept is the best way to come out of this circle of economic plight. The world is moving forward, and so should we, as digitalization is inevitable, and change is the only constant.

[1] Regulation of Cryptocurrency around the world, LIBRARY OF CONGRESS (Feb. 24, 2021, 5:51 PM), https://www.loc.gov/law/help/cryptocurrency/world-survey.php [2] Ministry of Finance, Inter-Ministerial Committee on Virtual Currencies submits its Report along with Draft Bill ‘Banning of Cryptocurrency & Regulation of Official Digital Currency Bill, 2019, (Jul. 22, 2019, 05:01 PM), https://pib.gov.in/PressReleasePage.aspx?PRID=1579759 [3] Reserve Bank of India, Prohibition of Dealing in Virtual Currencies (VCs), RBI/2017-18/154, (Issued on April 06, 2018). [4] Internet and mobile association of India Vs. Reserve Bank Of India, (2020); 2020 SCC Online SC 275

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[*] Keerthana Raavi is an undergraduate student from Jindal Global Law School, Sonepat. For any discussion related to the article, she can be contacted via mail: keerthanaraavi.inbox@gmail.com.

Preferred Citation – Keerthana Raavi, “The Prominence of Cryptocurrency Encompassing the Pandemic", Syin & Sern Law Review, Published on 27th February 2021.