In news: Crypto Awareness Campaign

crypto

The Investor Education and Protection Fund (IEPF) will launch an outreach programme soon to create awareness of cryptocurrencies.

What is Cryptocurrency?

A cryptocurrency is a digital asset stored on computerised databases.
These digital coins are recorded in digital ledgers using strong cryptography to keep them secure.
The ledgers are distributed globally, and each transaction made using cryptocurrencies are codified as blocks.
And multiple blocks linking each other forms a blockchain on the distributed ledger.
There are estimated to be more than 47 million cryptocurrency users around the world.
These cryptocurrencies are created through a process called mining.

The Investor Education and Protection Fund (IEPF) is managed by the IEPF Authority, which was set up in 2016 under the provisions of Section 125 of the Companies Act, 2013.
The Authority is entrusted with promoting awareness among investors, makes refunds of shares, unclaimed dividends, matured deposits and debentures and so on to rightful claimants.
As for investment education, the idea is to reach out to household investors, housewives and professionals alike in rural and urban areas and teach them the basics.
Focus areas include primary and secondary capital markets, various saving instruments, the instruments for investment, making investors aware of dubious Ponzi and chit fund schemes and existing grievance redressal mechanisms, among other things.
Until the end of October, it had conducted more than 65,000 awareness programmes covering 30 lakh citizens.

RBI caution: The Reserve Bank of India (RBI) has recommended framing legislation on the sector. It is of the view that cryptocurrencies should be prohibited.
Fiscal stability at stake: The crypto dilemma stems from concerns about the unregulated currency having a destabilising effect on the monetary and fiscal stability of a country.
Involved in unlawful activities: Further, crypto exchanges in India are being investigated for their alleged involvement in unlawful practices such as drug trafficking, money laundering, violating foreign exchange legislation and evasion of GST.
High volatility: Cryptocurrency investing can be a complex and risky endeavour as the category is extremely volatile and works round the clock.

Regulation is must: Apart from the outreach programme, there has to be a regulatory mechanism for the crypto sector.
Messaging has to be right: If the government takes a heavy-handed approach and starts saying things like virtual currency is not legal in India that will not be entirely true.

RBI has banned banks and other regulated entities from supporting crypto transactions.
The Government has confirmed that expenditure incurred in mining cryptocurrency is considered capital expenditure and not a cost of acquisition.
Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 was introduced by the Centre.

Crypto assets are borderless and therefore, any legislation (for regulation or for banning) would require international collaboration to prevent regulatory arbitrage.
The collaboration must entail an evaluation of risks and benefits and the evolution of common taxonomy and standards.