Clampdown On Cryptocurrency

The domestic cryptocurrency market has gone into a tizzy. All fingers point at the RBI and the finance ministry.

- Anurit Kanti & Avishek Banerjee

EVER SINCE IT WAS INVENTED 10 years ago as a panacea for the excessive use of fiat currency, cryptocurrencies have been disrupting the global financial ecosystem. It has even created ripples in the digital world — and beyond. It has lured investors with the promise of making easy wealth. It has invited anarchists with the idea of a new way to exchange goods in the ever-evolving econorama. And it has given regulators and governments all over the world sleepless nights because it tends to undermine local legal currency if people turn to cryptocurrencies for day-to-day transaction.

In these 10 years, they (there are many varieties) have acquired a market worth over $269 billion, and new cryptocurrencies are not only being introduced every day but digital-mining farms — using massive computing and electric power — have sprung up across the world to create more and more such digital currencies. There are 1,566 cryptocurrencies trading in many of the world’s unregulated exchanges — with bitcoin itself, the popular one among them all, valued at about $160 billion.

And it is no surprise, over the last few years, many Indians have ventured into the world of cryptocurrency investing. A recent report notes that there are more than two lakh cryptocurrency investors in India, and the number is growing (unofficial estimates suggest a far fuller figure). Online exchanges have reportedly been fast adding digital currency enthusiasts because of the frenzied speculation and price rise in these currencies.