Will crypto ever be able to legal tender a country?

El Salvador’s President Nayib Bukele said in a national address on Thursday that a recently passed law making a bitcoin legal tender will take effect on September 7, noting that its use will be optional. On June 9, El Salvador’s Congress approved Bukele’s proposal to embrace cryptocurrency. This makes El Salvador the world’s first country to accept crypto as a legal currency.

“Bitcoin will not be mandatory, and anyone can choose to receive bitcoin if they do not want it,” Bukele stated that bitcoin payments could be opted to be received in dollars if the recipient is not interested in bitcoin. Bukele said that salaries and pensions would continue being paid in U.S. Dollars but did not specify if this included salaries paid to employees of the state.

Athena Bitcoin will invest more than $1 million in cryptocurrency ATMs

Athena Bitcoin stated earlier in the day that it will invest more than $1 million in El Salvador to install 1,500 cryptocurrency ATMs, particularly in areas where residents receive remittances.

Athena Bitcoin’s website states that ATMs can be used for buying bitcoins and selling them for cash. The firm plans to install approximately 1,500 ATMs and hire staff. It will also open an office in El Salvador to conduct operations there. El Salvador became the first country to accept bitcoin as a legal currency in June. 

This change will take effect in September.Nayib Bukele, El Salvador’s president, “posed us with the difficult challenge of 1,500 ATMs. We will pursue that challenge, but in stages.” Matias Goldenhorn, the director of Latin America at the firm, stated that they are a private business and want to see sustainable development in El Salvador.

Bukele believes that the cryptocurrency has the potential to be a remittance currency in Salvador for Salvadorans abroad.

Golden horn stated that “initially we will bring dozens (of machines), (we’ll) evaluate what the business model in El Salvador is like, which will likely be different from in the United States,” Goldenhorn said.

Athena installed its first cryptocurrency ATM at El Zonte beach in El Salvador last year as part of a Bitcoin Beach project. This experiment aimed to make the town one of the first bitcoin economies.

The World Bank said it couldn’t assist El Salvador in bitcoin implementation due to environmental and transparency drawbacks. Meanwhile, the International Monetary Fund said it sees “macroeconomic and financial issues” in the country’s adoption.

Is it safe for Indian investors to invest in cryptocurrency?

WazirX CEO Nischal Shetty says that Bitcoin is an alternative asset class. It’s been around for more than a decade and has survived two global recessions. “Like gold, cryptocurrencies are seen as a hedge to protect fiat portfolio, and its value as a hedge lies in its inflation-beating qualities.

Investors used gold to protect themselves against stock volatility in the past. Today, however, crypto is becoming a mainstream investment option, especially for millennials. Shetty explained to FE Online that Indians could buy and sell Bitcoins in India.

It is legal to purchase cryptocurrency in India. There is, however, no guarantee that the amount invested will be safe as with regular investments.

Neeraj Dubey is a Partner in the Corporate Law Practice at Singh & Associates. He believes that privately issued cryptocurrencies are not safe.Section 26 of the RBI Act provides that “every banknote shall become legal tender in India at any time in payment or account for the amount stated therein and shall be guaranteed to be so by the Central Government.” 

The Central Government cannot guarantee virtual currency. Therefore, any virtual currency must be explicitly guaranteed by it to become legal tender. Parties are legally bound to accept the virtual currency as a payment method in that situation. According to Dubey, private cryptocurrencies are not safe.” FE Online was informed.

Dubey stated that the government had warned people about the dangers of dealing with virtual currency. He said that virtual currency is not a valid legal tender in India.

The RBI also warned about potential legal, financial, and operational risks associated with virtual currencies.

Dubey pointed to a Ministry of Finance notification that stated, “There is a real risk of an investment bubble of the kind seen in Ponzi Schemes, which could result in sudden, prolonged crashes exposing investors, particularly retail consumers. Losing their hard-earned cash.” To avoid being trapped in Ponzi schemes, consumers need to be extremely careful and alert.

Other risks that cryptocurrencies could be exposed to include the storage of cryptocurrencies in electronic/digital formats, exposing them to hacking, loss of passwords, malware attacks, and other risks that could lead to a permanent loss to users’ money.

Dubey stated that online transactions could be encrypted and therefore are vulnerable to illegal and provocative acts such as terror-funding and smuggling, drugs trafficking, and other money-laundering laws. Users with limited knowledge might not know this because these transactions are fully encrypted.Shetty believes that crypto will become mainstream quicker as more investors enter the market and first-timers join it.

Are there any risks to investing?

Shetty recommends that you start investing in cryptocurrency, even if you are aware of all the risks.After doing due diligence on the project, you should decide if you are willing to take on risk. Also, I recommend that you use legitimate exchanges that adhere to KYC and AML guidelines. Shetty stated that it is important to avoid scams and people promising to double your investment, as in any other industry.

Shetty stated that there is currently no regulation of crypto in India. But, Indians can buy Bitcoin. Indians can buy and sell cryptocurrencies in India. There is no ban on this. He claimed that cryptocurrency exchanges could not open bank accounts due to a banking ban from July 2018 to March 2020. 

The Supreme Court of India quashed the ban on cryptocurrency exchanges in 2020. Shetty stated that WazirX is part of the Internet and Mobile Association of India. “We are currently working on a code for Indian cryptocurrency companies.”

India to ban all private cryptocurrencies

Dubey stated that the Department of Economic Affairs and Ministry of Finance had established a committee to examine virtual currencies and recommend specific actions. The report of this committee, dated February 28, 2019, recommended that all private cryptocurrencies be banned except those issued by the state.

To clarify and follow the suggestion, the Cryptocurrency Regulation of Official Digit Currency Bill, 2021 (“ODC Bill”) was introduced. It aims to create a framework to facilitate the creation of an official digital currency that will be issued by the Reserve Bank of India (“RBI”) and ban all private cryptocurrencies from India. It will, however, support and allow the use of underlying cryptocurrency technology.

GST on Cryptocurrency

Dubey stated that the Central Economic Intelligence Bureau (an arm of the Finance Ministry) conducted a study about levying GST for cryptocurrency. It has presented the proposal to the Central Board of Indirect Taxes & Customs. This suggests that cryptocurrency can be considered current assets, and GST will be charged on margins earned in its trading.

Shetty claims that the RBI ban was a rash and unresearched move. Shetty stated, “We had challenged the move in the Supreme Court, and the Court annulled the banking ban. Bitcoin is gradually becoming a popular investment option, especially for millennials. 

The majority of WazirX users under 30 are younger than the rest. Crypto is becoming a popular investment alternative for youth, with more people participating in it. Many consider Bitcoin to be digital gold. In many ways, it is considered superior to gold. It allows anyone to send and get Bitcoins in an unlimited way.

Dubey stated that Bitcoin had sparked a lot of curiosity among Indian youth. IAMAI’s support for cryptocurrency usage has been an important factor in its popularity. He stated that the Indian startup industry is especially fond of cryptocurrency because they allow cross-border transactions to be done efficiently.

 This gives small and medium businesses a lot more opportunities to grow their presence in the global market.Dubey stated that cryptocurrency is considered an asset that is not being served by the banking system.

 “Cryptocurrency” is seen as an asset, even though it has low transaction fees, no interference from the bank system, easy access, universal recognition, and inherent security. He said that despite repeated attempts to ban it, it is growing in India.

What’s the future for cryptocurrency in India?

Dubey stated that Indian regulators and governments are skeptical about virtual currencies and concerned about the risks.”Since the Cryptocurrency Regulation of Official Digital Currency Bill is already in the pipeline, 2021 will create a “facilitative frame” for the creation of an official cryptocurrency that will be issued from the RBI. 

However, it will not be easy for private cryptocurrency. The Bill described above will ban all private cryptocurrencies in India but will allow certain exceptions to promote cryptocurrency’s underlying technology and its uses.” Dubey said.Shetty believes that India’s future holds great promise for cryptocurrency.

“We have seen our Prime Minister speak positively about blockchain. I am confident that he will ensure that the Indian youth is not left behind in this global phenomenon!” Slowly, more people are becoming more aware of crypto and want to pursue a career as a Blockchain engineer.

 Positive regulations will help crypto adoption in India. This will lead to more blockchain-based startups. Crypto will soon become mainstream thanks to tech giants such as JP Morgan and Facebook joining the crypto train. We’ll also see more uses of crypto in the future. Shetty stated that the future is bright.

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