Caution and alertness by Central Government and Reserve Bank averted

New Delh: Co-founder Sam Bankman-Fried’s $16 billion empire gets ruined after US-based cryptocurrency exchange FTX collapsed. This has led to a massive drop in the value of cryptocurrencies worldwide. The value of cryptocurrency, which was at three trillion dollars (three hundred thousand crores) in 2021, has now come down to less than one trillion dollars. While the world feels the shock, India has not been particularly affected because the Government of India and the Reserve Bank of India had warned their people against investing in cryptocurrencies since the beginning. It was only because the government and the Reserve Bank have repeatedly made them aware that investment in this is unsafe. Hence, the investment of Indians in this remained very limited. Therefore, Indian investors today seem safe from the fallout in cryptocurrencies.

As much as $16 billion vanished into thin air after the FTX Cryptocurrency Exchange empire fell. There were claims that this was the first instance of such a massive loss of wealth in human history. Investors in cryptocurrencies have started moving strongly to withdraw their investments. This has affected cryptocurrencies like Bitcoin and Ether, and their value has fallen. Cryptocurrencies have been hit hard by this. Cryptocurrencies struggling to gain credibility and recognition will face serious consequences in the future.

The central government and the Reserve Bank have made Indians aware time and time again that investment in cryptocurrencies was not safe. Also, to curb Indian investment in cryptocurrencies, the central government decided to impose a 30% tax on the returns earned. However, though the government levied this tax, it did not mean it had approved the cryptocurrency; the government and the Reserve Bank had warned. There were claims that this limited the investment of Indians in cryptocurrencies to only three per cent.

Investment and finance luminaries hail India’s decision on cryptocurrencies while saying what would have happened had the central government and the Reserve Bank of India not given such warnings by issuing cautions. India had called for international solidarity to control cryptocurrencies. Prime Minister Narendra Modi made the world aware of cryptocurrencies’ destructive effects and misuse. Besides, Finance Minister Nirmala Sitharaman had warned in Parliament that it was imperative to stay away from cryptocurrencies. Economists say that Indian investors were safe from the fall in cryptocurrencies because of these cautious policies.

Meanwhile, India does not oppose the blockchain technology behind cryptocurrencies. This could be the future currency technology. But nobody controls and is not responsible for the cryptocurrencies that use this technology. Therefore, Finance Minister Sitharaman had said that India’s position was that investment in this can never be safe. Also, in his lecture at the Sydney Dialogue in Australia a year ago, PM Modi made aware that cryptocurrencies were being used for terrorism and drug trade, which could destroy the youth of democratic countries.