Bitcoin Current Affairs

Government sets up Inter-Disciplinary Committee to examine framework for Virtual Currencies

The Union government has constituted a time-bound inter-disciplinary committee to come up with an action plan for dealing with virtual currencies so as to fix the regulatory gaps in the existing framework governing virtual currencies. The committee is required to submit its report within three months.

Need

The circulation of virtual currencies, of late, has become a cause of concern. With respect to the virtual currencies, Reserve Bank of India (RBI) has also cautioned the users, holders and traders of Virtual currencies about the potential financial, operational, legal, customer protection and security related risks through press releases in December 2013 and February 2017.

Virtual Currencies, also called as digital/crypto-currencies,  are a type of unregulated digital money that is neither issued by a central bank/public authority, nor is necessarily attached to a fiat currency, but is used and accepted among the members of a specific virtual community. They are capable of being transferred, stored or traded electronically. The examples of virtual currencies are Bitcoin, Litecoin, Darkcoin, Peercoin, Dogecoin, Primecoin etc.

Composition

The nine-member inter-disciplinary committee will be chaired by Dinesh Sharma, special secretary in the economic affairs department. The committee will also have representatives from the Department of Economic Affairs, Department of Financial Services, Department of Revenue, Ministry of Home Affairs, IT ministry, Reserve Bank of India, NITI Aayog and State Bank of India.

Mandate

The committee is mandated to:

  • Take stock of the current status of Virtual Currencies both in India and globally;
  • Examine the present global regulatory and legal structures governing Virtual Currencies;
  • Suggest measures for tackling the issues related to Virtual Currencies including issues like consumer protection, money laundering etc;
  • Examine other relevant issues related to Virtual Currencies.

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Japan officially recognises Bitcoin as currency

Japan has officially recognized bitcoin and digital currencies as legal money along the lines of other fiat currencies with effect from April 1, 2017.

The recognition comes after implementation of a new law amending Banking Act in Japan for legalizing these currencies. It will help in integration of digital currency into legal banking system through regulatory scrutiny. 

Key Facts
  • The recognition means regulations governing banks and financial institutions will be applicable to crypto-currency and digital currencies exchange platforms
  • They will be also required to comply with strict Anti-Money Laundering (AML) and Know Your Customer (KYC) requirements, along with annual audits.
  • Other requirements include meeting the stated capital and cyber security requirements to ensure consumer protection.
  • It also makes these digital currencies as “property of value,” meaning that they can be used for payment in the broader marketplace and that it may be bought or sold.

What is Bitcoin?

  • Bitcoin is a form of digital currency or virtual currency created and held electronically. No one controls it that is not regulated by any central bank or government.
  • They aren’t printed, like dollars or euros – they’re produced by people, and increasingly businesses, running computers all around the world, using software that solves mathematical problems.
  • It is also called a “cryptocurrency” since it is decentralized and uses cryptography to prevent double-spending, a significant challenge inherent to digital currencies.
  • Bitcoin is a distributed peer-to-peer digital currency that functions without the inter-mediation of any central authority.
  • It can also be traded on an open market and its exchange rate fluctuates much like a stock market i.e. based on the demand.

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