While the Union government mulls law to regulate cryptocurrency, Swadeshi Jagran Manch (SJM), an affiliate of Rashtriya Swayamsevak Sangh (RSS), has demanded a ban on the private digital currency but supported the exploration of blockchain technology.
In a resolution passed following the two-day Rashtriya Sabha of SJM in Gwalior, the outfit said that virtual currency should be banned citing reasons such as “there is no underlying asset”, “issuer is not identifiable”, “recognition of cryptocurrency may lead to heavy speculation which may adversely impact financial markets” and “recognition may also result in money laundering and terror financing”.
Putting forth its demand for the ban, the SJM said persons holding cryptocurrencies may be allowed to sell or exchange the same within a short period, subject to the provision of submitting the information to the income tax department. It has also asked the government to create awareness and to come up with a law for the issuance of digital currency by the RBI.
Allowing cryptocurrency “shall result into capital account convertibility from the back door”, said the SJM.
SJM, however, said that blockchain technology should not be linked to cryptocurrencies only and the use of this technology in all spheres of economic or social activities must be encouraged.
According to the SJM, an estimated 20 million people around the world have put their money in cryptocurrencies. Most of these are youth because they feel that they can get quick profit by putting their money in it, said the SJM.
“First of all, it’s a wrong notion that cryptocurrency is a currency. Currency means an instrument issued by the central bank and guaranteed by the government. Cryptocurrencies are privately issued virtual coins that have no legal recognition. Secondly, crypto is being used by criminals, terrorists, smugglers and persons involved in hawala. Thirdly, …it is a valuable virtual asset …known to its holder only. Authorities will come to know only when it is transacted through a bank,” the SJM said.
The SJM said although cryptocurrencies can be taxed when a transaction is declared, if it is sold abroad and not in the country, then it will not be taxed. “In fact, crypto is not a fiat asset, it cannot be shown in the balance sheet of a company or an individual. That is, crypto is becoming a medium for evasion of income tax, GST and many other types of taxes. There is yet another problem that it’s the most convenient method to transfer capital from a country bypassing rules,” said the SJM.
It has also pointed out the currency’s volatility that may encourage betting and how it operates as a dark web. According to the SJM, if the same money is invested in productive assets, it would help GDP growth.
“One of the major arguments against crypto is that its mining consumes a huge amount of electricity, which can lead to power shortages. This is one of the biggest arguments China has made in banning crypto,” it added.