KYC stands for “Know Your Customer” and is a list of the identity of customers that the bank has on record. If you want to trade using bitcoin, look for an efficient and secure trading platform all you have to do is visit its website and sign up. From the customer perspective, it involves sharing intimate details such as your full name, contact information, copies of identity documents such as your driver’s license or passport, and additional financial information such as your income tax filings if you are an Indian resident.
The latest changes in the financial segment, such as the introduction of cryptocurrencies and the announcement of the Indian rupee, can mitigate the issues of KYC. Besides, it will also make the digital economy less vulnerable and give cryptocurrency a new lease of life.
Is the current asymmetric nature of digital currency forever? There is an urgent need for a regulator to regulate the two or at least bring about the changes needed for a viable ecosystem for both digital currency and the digital rupee in India. There is also a need for project-based and technology-based regulation to achieve better economic efficiency. So let’s discuss the possibility of whether cryptocurrency and the digital rupee can co-exist.
Such an effort is being made to ensure that the crypto sector prospers and blockchain technology gets mainstream adoption. It is also a matter of time when nations will issue their digital currencies like china, and blockchain will be used as a backbone for smart contracts.
While the future of cryptocurrency is bright, some issues need to be addressed if governments are serious about creating a stable and secure financial system without necessarily having to depend on banks or financial institutions. Presently, it is difficult for any government to ban cryptocurrency or use regulation and legislation to discourage users from using it.
It is due to the fully decentralized aspect of cryptocurrency whereby a ban cannot prevent anyone from using it even if they possess the knowledge about its operation; all the more government of India is not seeking a cryptocurrency ban as its main focus is to bring robust regulatory framework as the blockchain technology, and security of cryptocurrencies has impressed the Indian government in an exceeding extent.
Why cryptocurrencies and digital currencies should co-exist?
Digital currency is rising, and cryptocurrency can do more than exist as a medium of exchange. It has the potential to facilitate efficient and cost-effective payment mechanisms in a variety of situations. Moreover, digital currency can work in centralized and decentralized networks, making it applicable to many industries.
Whereas a digital rupee cannot be created out of thin air – all money creation will have to be governed by rules governing policy and agency issues. Both currency types can co-exist but with different objectives and usage cases.
Co-existence of digital currencies and CBDCs
The use of digital currency allows its users to transact without reliance on any authority. It is primarily considered the new form of funding with the ability to make payments instantaneously, without the need for intermediary financial institutions. Its decentralized nature acts as an independent entity that allows the user to purchase or sell goods and services. Issuing a national cryptocurrency would also require regulations governing its usage, which can be done through CBDCs. Co-existence of digital currency and digital rupee:
Digital currencies are beneficial because they can transfer money rapidly through the Internet, which is very fast compared to traditional methods of transferring money. However, digital currency has many disadvantages, such as its volatility, anonymity, and dependence on a third party for security undeniably, volatility is exceptionally significant for cryptocurrency traders, but it is not a positive sign if people want the digital currency to convert as a primary monetary system.
The digital rupee, a centralized currency, does not require the user to store their wallet but instead can be stored in any bank account or mobile storage app. It can also have a use case in online transactions such as online shopping, virtual money trading, etc. The digital rupee has its advantages, such as faster transaction time, no need for paperwork required, low cost, and more stabilization.
For crypto to be truly accessible, it needs a stable legal framework. India can be the best choice to ensure that crypto has good governance and a stable place in the financial system. If the digital rupee is used as a medium of exchange, it should regulate all the transactions. So its usage should have specific rules and regulations to maintain stability. The digital rupee will receive more support if an official organization and laws govern its usage rather than a central authority making decisions on behalf of all digital rupee users.