Banning Cryptocurrency

The Indian Government, under the chairmanship of Subhash Garg, appointed a committee for evaluating the working of cryptocurrency and its future scope. In its July 2019 report, the committee submitted a draft bill for the banning of cryptocurrency on the pretext of its illegitimate existence and its direct challenge to the legal tender of the government (Indian Rupee). Cryptocurrencies, which shot to fame after the 2008 economic meltdown, are a unique method of virtual transaction, run on blockchain technology, instead of the conventional banking sector where there is a third entity to regulate the transaction of the individual, like a bank. The blockchain technology does away with that third party transaction and instead gives peer-to-peer transaction. However, due to its fluctuating nature, the cryptocurrency is not getting enough support from the government; in addition to that the whole premise of cryptocurrency has an essence of extreme libertarianism, with a hue of anarchism. During the 2008 economic meltdown, where most of the banks went bankrupt and millions of dollars were lost, economists blamed the banking sector for its overemphasis on unsecured loans. This distrust on the banking organisation boosted the blockchain technology, which was primarily introduced to support the mechanism of cryptocurrency. Under the blockchain technology, the nodes were able to transact without any third party interference on a peer-to-peer level and as the transactions were open to all the nodes to see, it became impossible to change any of the block of the blockchain, which brought in the immutable characteristics of the cryptocurrency. It is not that blockchains were immune to shortcomings—there is a possibility of 51% attack—but the possibility of that happening is very rare.

The main heading of the bill shows its objective clearly minted on its text that is “Banning of the Cryptocurrency.” Keeping this predetermined objective of the bill in mind, it defines as to what qualifies to be called as a “cryptocurrency.” The bill says under Section 2(1)(a),