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The Indian government is planning to ban all operations of cryptocurrencies in the country, except for a state-backed digital currency. The ban will be operationalized with a new law coming into effect. The Cryptocurrency and Regulation of Official Digital Currency Bill of 2021 are slated to be introduced in the budget session of the Parliament. In the context of evolving digital finance globally, the Government of India should reconsider its thinking about these new financial systems that are being developed.
The move is expected to hit the nascent field in India and impact 342 companies and an estimated 5 million users involved in trading and holding cryptocurrencies. Reports also suggest that users holding on to these cryptocurrencies could be fined, once the new law comes into effect, with the probability of them being given time to liquidate their holdings.
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Cryptocurrencies like Bitcoin, Ethereum, Bitcoin Cash, Monero and Litecoin, etc, are digital assets designed to function as a medium of exchange, and records of ownership and transactions are kept on a decentralized ledger called blockchain with strong cryptography. But these digital assets are known as tokens are not issued by a central monetary authority and are not backed by any physical asset. These tokens are “mined" by users who contribute computer processing power and are rewarded for their efforts. The price of these tokens is simply ruled by the forces of demand and supply.
The genesis for the idea of cryptocurrencies is older than people believe. The 1980s saw the rise of the Internet and along with it the idea of sovereign cyberspace, which would transcend borders and be free from all controls of nation-states. But this utopian vision of cyberspace still needed a currency for people to carry out transactions and conduct commerce. Following numerous experiments to create this system, the first cryptocurrency, Bitcoin, was created in the aftermath of the 2008 global financial crisis. But its development was a culmination of various digital peer-to-peer payments experiments.
Bitcoin's enigmatic creator(s?) Satoshi Nakamoto noted a fundamental issue problem with fiat currency and the centralization of finance. “The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust," he (or they). The distrust of central banks by early adopters of Bitcoin was probably fuelled by the actions of central banks which ultimately bailed out the erring investment banks which caused the 2008 financial crisis.
India & CBDC
Contrast this with what the government is attempting to do with its virtual currency. Essentially, the government of India is looking to introduce the idea of Central Bank Digital Currency (CBDC) where it acts as a digital representation of a country's fiat currency and will be backed by a suitable amount of monetary reserves like gold or foreign currency reserves. These digital fiats will be regulated by the country's monetary authority.
In India's case, this would fall in the jurisdiction of the Reserve Bank of India (RBI) but WazirX is among the few cryptocurrency exchanges and businesses in India lucky to survive in the period of cold. Both CBDCs and cryptocurrencies use blockchain technology as their backbone for maintaining an immutable ledger for the transactions that take place using these tokens. However, while the blockchain on cryptocurrencies is open to the public where everyone can view and authenticate transactions, the blockchain on CBDCs is permission where limited entities can carry out the functions of authenticating and viewing transactions.
CBDCs are a 'virtual store of value' and they can be converted to cash in local currency at a fixed rate. CBDCs tokens also would bear interest on the central bank's balance sheet. Currently, there are two modes of CBDCs being developed in the world – a retail token (meant for direct use by savers) and a wholesale token (meant to be used by banks and lenders subject to central bank regulations).
The modalities are still being worked out, but it could also serve as an excellent vehicle to push the central bank's plan to increase retail investors' participation in the Government Securities. However, there is a risk to them. The yield on government securities is a little higher than bank deposit interest rates and savers might find the returns on CBDCs more attractive than what banks are offering, thus banks could lose their primary means of funding.
As more savers move their money from demand deposits, it will force them to rely on costlier means of funding. Central banks also would be at the risk on their balance sheet in the event of another financial crisis and will have to function as a crucial financial intermediary in those times. And if CBDCs also take shape as a viable payment system, it raises several privacy issues with the state being allowed to see all transactions by a user.
CBDCs does bring interesting potential uses for the Indian economy in general and it's heartening to see India join a growing list of countries like The Netherlands, China, Sweden, the United States, Canada and Norway that are looking to introduce a digital version of their currency. It is a worthwhile experiment to follow, but it doesn't make sense why they cannot co-exist with existing cryptocurrencies.
“Money for nothing?"
Reading of the proposed crypto ban indicates that the government might believe that there is no intrinsic value in cryptocurrencies; and also might not like the way its value is pegged to the market mechanism. In its first attempt to eliminate cryptocurrencies was reactionary as many people fell prey to shady operators posing as cryptocurrency companies and the RBI issued a circular where it said that while cryptocurrencies were not banned, it did bar entities regulated by it, including banks, from providing services to any person or firm dealing with cryptocurrencies.
The Supreme Court of India had quashed the RBI's cryptocurrency order in March 2020 giving a brief respite to cryptocurrencies holders in the country and saw the resumption of services by different players.
Fundamentally, the Indian government's thinking is ruled by the mantra that “Blockchain is good, but cryptocurrencies are bad." It's evident by the bulletin it put on the Lok Sabha where it said that it would allow “certain exceptions to promote the underlying technology of cryptocurrency and its uses." This seems contradictory statement when it is looking to stop all research into this space and innovations that it is creating.
This policy might have originated in protecting the interests of the common man. But this raises the question of who invests or cryptocurrencies? Is it the common man who buys Bitcoin or HNIs?
While it is true that few cryptocurrencies might be inflated and there could be few Ponzi schemes posing as crypto businesses, the Indian government can issue detailed signposts and guidelines for investors planning to invest in them, like what the Australian government has done. The Indian government's policy thinking to ban cryptocurrencies might also stem from the narrative that they are used for terror financing and money laundering. While during its inception, Bitcoin might have been used for conducting illicit deals on the dark web, today the cryptocurrency-related crime is on the decline.
In 2020, the 'criminal share' of all cryptocurrency activity fell to just 0.34 percent, or $10.0 billion, in transaction volume, according to a report by Chainalysis, a company the specializes in cryptocurrency investigations for governments, exchanges, and financial institutions. The report also shows that cryptocurrencies are almost never used for terror financing and most cryptocurrency-related crimes are scams, ransomware, darknet market deals, and stolen funds.
It stands to reason of course. A mal-actor would have to be extremely stupid to conduct terror financing on an immutable ledger that can be seen and must be authenticated by all nodes on a blockchain. In India, traditional offline assets like real estate and gold still account for most money laundering operations and financing mal-actors.
Real estate is still not covered under the Money Laundering Act while purchasing gold does not even require KYC. Legitimate cryptocurrencies in India have been pushing for better KYC to open wallets for cryptocurrency transactions. The government can extend these requirements formally to cryptocurrencies as well.
The paucity of understanding can also be seen in the language the government is using to describe non-CBDCs as “private cryptocurrencies" and not using established nomenclature. Cryptocurrencies like Bitcoin, Litecoin, Ethereum, etc. are considered public cryptocurrencies as users can view and verify all transactions and their details using these tokens on a public ledger, and the blockchain used is open-sourced.
Cryptocurrencies such as Monero, Dash, and Zcash on the other hand are designed to be private where transaction details are hidden. However, these cryptocurrencies are still public in the sense that they have public open ledgers, but transaction information is obfuscated in varying degrees to protect the privacy of the end-users. And then there are efforts like Facebook's Libra, now re-named Diem, that use a private or permissioned blockchain where only a few trusted entities can keep a track of the ledger and allowed to mine the tokens for its transactions.
There are varying degrees of complexity and innovation that can be beneficial to people in general, but the government is dismissing and banning all of them by using a catch-all phrase called “private cryptocurrencies".
Who should regulate Crypto in India?
The reluctance to engage with cryptocurrencies in India could emanate from deciding on which regulator will have to deal with them. If it is treated as a currency, the burden of regulation would fall on the RBI. If it is considered a security or a commodity, the Securities and Exchange Board of India (SEBI).
Contrary to the misperception that there are no regulatory frameworks for them now, the way how cryptocurrencies are being used and traded is more akin to a digital commodity. Cryptocurrencies are traded directly through exchanges and even through financial derivatives like ETFs, options, and futures, and contract for differences (CFDs). Indeed, with the uncertainties in the world right now, cryptocurrencies and decentralized finance were the best performing asset class, beating gold, stocks, and other global commodities in 2020.
Cryptocurrencies are unviable as a currency right now due to the massive changes in corrections and the time it takes for a transaction to get authenticated by the various nodes on the blockchain. Take for example the online games marketplace Steam's decision to stop purchases using Bitcoin. The company explained that Bitcoin transaction fees to buy a game shot up to $20 in 2017.
Also due to the price volatility, if the price of Bitcoin shot up at the time of the transaction, Steam had to refund the difference to the user and conversely, if the price went down the users had to pay the difference again. There is also an engineering concern to consider as every transaction needs to be authenticated by every node on the blockchain thus the time for a transaction increase.
Currently, the time for confirming a Bitcoin transaction is about 10 minutes. Though there are efforts being made by different cryptocurrencies to speed up the process of authentication for more real-life use cases. But still, it is nowhere close to where users can buy a cup of coffee using cryptocurrency.
With this in mind, the burden for regulating this new form of finance could fall in SEBI's court. Ideally, SEBI should strongly consider allowing cryptocurrencies as part of its regulatory sandbox and combine its learnings from jurisdictions like the United States, Japan, and Australia.
Learnings from the US, Japan, Australia
Though the United States does not consider cryptocurrencies as legal tender but recognizes crypto exchanges as money transmitters as the tokens are other value that substitutes currency. While the Securities and Exchange Commission (SEC) recognizes them as securities and is working on enacting securities law on them. Meanwhile, the Internal Revenue Service (IRS) recognizes them as property and has guidelines for the same.
The United States also takes a pragmatic approach to different offerings and takes a case-by-case approach. For example, the SEC cracked down on Facebook's Libra cryptocurrency project. As Libra used a private permissioned blockchain and controlled the number of nodes, it was able to drive down the time for a transaction and was also able to control its price volatility.
Essentially, it functioned more like are a stable private currency that could rival the US Dollar and less like a security. Hence, the project did not take off. However, it clarified how it was treating Bitcoin and said that they are not treating it as a security but rather as a store of value and noted that its rise was driven by the inefficiencies of the payment systems in the country. But in both cases, it was made clear that they are not legal tender.
Japan takes a longer view of the ecosystem. It does not consider cryptocurrencies as security, nor does it treat them on par with fiat currency. Considering the many use cases by different tokens, it defines them under the broader umbrella of Crypto Assets. Exchanges are required to register themselves as payment service providers under its Payment Services Act.
Further, it requires these exchanges to maintain strict Know-Your-Customer (KYC) records of investors and users and comply with all anti-money laundering and combating terror finance rules (AML/CFT). In addition, the property rights framework will apply to these crypto assets.
Australia stated particularly that Bitcoin and other tokens that share its characteristics are considered property and will be subject to Capital Gains Tax. In addition, it has now come out with detailed signposts and guidelines for investors planning to invest in Initial Coin Offerings (ICOs) with clear warnings about these risks along with case studies.
Don't be cryptic or critical of Crypto yet!
The government's push to ban all cryptocurrencies in the country is simply throwing out the baby along with the bathwater. It is ironic that the Indian government is following the same policy decisions as China, which banned all cryptocurrencies as well in favor of its digital fiat currency. The Indian government should in all manners emulate the idea that it is an alternative to China and not follow the same policy prescriptions set by Beijing.
There is a risk that India will lose out on the billions of dollars in the new cryptocurrency –led world of finance by enforcing the ban. There might be another brain-drain as more minds who believe in crypto-finance will leave India to set up shop in friendlier countries.
Thus, the underlying asset of all cryptocurrencies is the failure of governments globally and central banks to provide better financial outcomes for citizens. Thus, the best way to handle the proliferation of private cryptocurrencies is to make sure that state institutions and fiat products work well for retail participants. The Indian government's ban on cryptocurrencies is overprotective at best and at its worst, it could be viewed as an attempt to maintain an iron grip on how its citizens use their money. (IANS)
London (CNN)- At five o'clock in the morning, the esteemed 86-year-old astrophysicist Jim Peebles was woken suddenly by the telephone ringing."In previous experience, the only phone calls at that time of night are bad news," he said. This one was great news. "The opening sentence from the caller was: 'The Nobel committee has voted to award you the Nobel Prize in Physics. Do you accept?'" Peebles recalled. The wording threw him. Who wouldn't accept a Nobel Prize? "You know the Bob Dylan fiasco?" he said during a phone interview with CNN. "That might have put the wind up them."The "fiasco" Peebles mentions refers to the 2016 Nobel Prize in Literature, which was controversially given to an utterly unimpressed Dylan.Aside from being ever-presents on college campuses in the 1960s, little connects Peebles, an expert in theoretical cosmology, with Dylan. But one of the starkest contrasts might lie in their reactions to winning a Nobel -- and the songwriter is far from the only laureate whose crowning turned out to be an awkward affair.
The five committees are notoriously secretive, fiercely shielding their choices from the outside world -- including the laureates themselves, who are told of their victories just minutes before they are announced to the public.
Jim Peebles speaking at the Nobel Prize banquet in 2019 Image credit: CNN
That tight-lipped mantra can lead to some heartening surprises, as it did for Benjamin List -- the co-winner of this year's Nobel Prize in Chemistry -- who was having coffee with his wife when he received the news.
"Sweden appears on my phone, and I look at her, she looks at me and I run out of the coffee shop to the street ... you know, that was amazing. It was very special. I will never forget," he told reporters on Wednesday after his victory was announced.It can also be far less celebratory. "I was lying in bed, and my wife woke up and heard my phone buzzing. And she yelled at me because my phone was waking her up," David MacMillan, who shared the prize with List, told BBC Radio 4 on Thursday."100% [I] missed the call. Classic Scottish person. I [didn't] believe this is happening, so I went back to bed," he added -- likely the most relatable sentence ever uttered by an expert in chiral imidazolidinone catalysts.
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And for some, the sudden ascension to Nobel laureate is an unwanted intrusion altogether. "Oh Christ," British-Zimbabwean author Doris Lessing said when reporters arrived outside her house to inform her she had won the Nobel Prize in Literature in 2007. "I'm sure you'd like some uplifting remarks of some kind. "It's a wonderful thing," Reinhard Genzel, an astrophysicist who won last year's Nobel Prize in Physics, told CNN of his win and the months since. "But it's a chore as well."
What it's like to win a Nobel PrizeFew Nobel winners can honestly say their lives weren't changed when they received the phone call.As long as they believe it, that is. "These days you get these cold calls, and I thought this is another one of them," Abdulrazak Gurnah, the winner of this year's literature prize, told the BBC on Thursday."This guy said, 'Hello, you have won the Nobel Prize for Literature,' And I said, 'come on, get out of here. Leave me alone,'" Gurnah said. "He talked me out of that, and gradually persuaded me."Winners often can't be contacted at all, leaving them to find out about their wins from the news, their family, or even their next-door neighbors.
Nobel Peace Prize winners Ressa and Muratov Image source: CNNEconomist Paul Milgrom was woken in the middle of the night in California by his colleague Robert Wilson banging on his front door. "Paul, it's Bob Wilson. You've won the Nobel Prize," he shouted into the intercom. "Yeah, I have? Wow," an utterly confused Milgrom responded, in an exchange captured by a doorbell camera.
Genzel's phone call came while he was in a Zoom meeting with colleagues last October. "I had absolutely no inkling," he said. "I thought, my God ... obviously this is a fantasy."
The committee's secretary told him he "couldn't say anything for 15 or 20 minutes," so Genzel tried his best to keep the news to himself. "I walked over to our meeting room ... (my colleagues) told me afterwards I was stumbling in there, slightly gazed, telling them to switch on the TV," he said.Malala Yousafzai, the youngest Nobel winner at 17, was midway through a chemistry lesson at a school in Birmingham, England, when a teacher interrupted to tell her she had won, she told Reuters.She later told Vogue that she modestly left the achievement off her university applications, because she "felt a bit embarrassed." But there are occasions, too, where the winner isn't quite as thrilled as the Nobel committee might imagine.
Dylan and Ernest Hemingway both skipped the Nobels' annual banquet; the latter made a point of telling the Swedish Academy that he had "no facility for speech making and no command of oratory." But arguably it was Lessing who had the most memorable reaction. She learned of her win as she stepped out of a taxi on the way back from the grocery store. "Have you heard the news? You've won the Nobel Prize for Literature!" an enthusiastic reporter told her. Her eyes rolled back in her head before the journalist had even finished his sentence. Lessing -- accompanied by a male acquaintance who stood next to her, bemused, his arm in a sling and a single artichoke in his hand -- was clearly more interested in collecting her shopping than talking to the world's media.
Also read: Abdulrazak Gurnah- The New Nobel Laureate
Asked how she felt, she expressed little enthusiasm: "Look, I've won all the prizes in Europe, every bloody one."
"Am I supposed to get excited, or elated, or what?" she remarked. "One can't get more excited than one gets, you know?"
'I was treated like a rock star'
As soon as Genzel's win was announced last year, his face was on televisions around the world. The announcement of a Nobel Prize winner makes the front pages of newspapers and websites almost everywhere, throwing a sudden spotlight on little-known scientists and their complex research. "Once the announcement is made, you lose your identity within half an hour," Genzel said. "The telephone rings all the time. "Peebles had a similar experience just minutes after his early morning phone call. "When I returned to bed my wife said, 'What was that about?' I said 'Nobel Prize,' and she said: Oh God." Within minutes, the couple had a photographer outside their door. Genzel suddenly found himself answering questions about politics on late-night German TV, angering some of his friends with his responses. Peebles, meanwhile, spent much of the day looking through emails from every corner of the world: "Please come visit us, please read my manuscript..."
Reinhard Genzel posing with his medal Image source: CNN
"It's one thing to say that the Nobel Prizes attract attention. It's another to experience it," he said. Sometimes, personal relationships change. "There is of course a lot of envy, from some colleagues -- many people who are close to me in the same field might very well say, 'Why did he get it?'" said Genzel. But before the Covid-19 pandemic scuppered plans for two years in a row, winners were also treated to a gala in Stockholm. "I was treated like a rock star ... I experienced what I expect rock stars to experience," Peebles said of his banquet in 2019. "It's a wonderful honor." "My attache had an almost endless list of things to do," he added. "'Now you must meet these influential people. Now you must go to a news conference. Now we will have dinner with some important people. And on and on.' "Genzel missed out on the festivities last year, but he enjoyed a low-key affair in Germany. "The governor of Bavaria offered us his residence, (and) we had a fairly nice event with the Swedish ambassador," he said. Two years on, CNN asked Peebles whether his email inbox has finally receded to pre-Nobel volumes. "I'd have to look at the data on that," he responded, ever the empiricist. But for both men and many other laureates, the most exciting part of the Nobel experience is simply that it gets people talking about science and culture.
"I find it almost a necessity to tell the public at large that there is truth, there is absolute truth," Genzel said. "What I hope is understood is the importance of the Nobel Prize in making people aware of the importance of curiosity-driven science or arts," he said. "I think it must be unique."
(This article is originally written by Bob Picheta)
Keywords: Nobel Prize, Reactions, Laureates
Married Hindu women are recognised by a red streak of vermillion in the middle of their foreheads. This is traditionally called 'sindoor', which is derived from the Sanskrit word sindura, meaning 'red lead.'. Sindoor is traditionally powdered turmeric and lime, sometimes red saffron, or red sandalwood. It is also called vermilion, or Kumkum.
Sindoor is traditionally powdered turmeric and lime, sometimes red saffron, or red sandalwood. It is also called vermilion, or Kumkum. Image source: Photo by Gayathri Malhotra on Unsplash
The origin of the practise of wearing sindoor is ambiguous, but historical records from the Harappan civilisation show that women wore sindoor as a sign of being married. Today's generation considers the wearing of sindoor an outdated and patriarchal ritual. However, there is still a large population of women who uphold the ritual of adorning their foreheads with vermilion every day.
Sindoor implies the longevity of a woman's marriage to her husband in the Hindu tradition. The longer the streak, the longer her husband's life is believed to be. Women wear it for the first time on their wedding day, when the husband applies it during the ceremony. As long as he remains alive, the red streak that fills the woman's maang, or hair partition, symbolises her fruitful married life.
When the finger used to apply the sindoor touches the pituitary gland every time, it arouses affection in a woman for her husband. Image credit: Photo by Amish Thakkar on Unsplash
The components of the red powder are believed to improve the sexual energy of the woman. When the finger used to apply the sindoor touches the pituitary gland every time, it arouses affection in a woman for her husband. The mixture that she wears on her head controls her blood pressure and activates her sexual drive.
These days, feminists do not take very lightly to the practice of wearing sindoor, as they view it as a sign of patriarchal dominance. They do not like being branded as 'belonging to a man'. They prefer to wear it as a style statement because it enhances beauty. Fashion designers have recently commissioned models to sport sindoor on the runway. New age feminists are making bids to allow widows and single women to adorn their foreheads with the vermilion streak.
Keywords: Sindoor, Marriage, Symbol, Women, Patriarchy
Actress Urvashi Rautela has recently announced the name of her next film which is titled 'Dil Hai Gray'. It's a Hindi remake of Tamil film 'Thiruttu Payale 2'. Urvashi Rautela will be seen alongside Vineet Kumar Singh and Akshay Oberoi.
Urvashi shares: "I am excited to announce the title of my next film 'Dil Hai Gray' on the auspicious day of Vijaya Dashami. The film is very close to my heart and it was lovely working with director Susi Ganeshan sir, producer M Ramesh Reddy sir, and my co-stars Vineet Kumar Singh and Akshay Oberoi. "
"The film has created a massive response in the south industry and I am very positive about the story that it will be also be loved by the audience here. I hope my fans would bless us with their love and support. Super excited to watch my film on the big screen after a long time," she concludes. (IANS/ MBI)
Keywords: urvashi rautela, movies, bollywood, south, remake, film