- Non-fungible tokens, which was a marker of crypto stability have registered a steep decline in the total volume of money it generates through sales
- On the other hand, India’s Finance Minister, Mrs. Nirmala Sitharaman is galvanising world leaders against cryptos
- Cryptos are impartial, shady and easy to use for nefarious elements, due to which they will fade away
When it emerged onto the scene, Cryptocurrency was touted as the next big thing in the Internet world. Its non-dependence on authorities for legitimacy made it a favourite of the post-financial crisis world. It had its fair run as well. However, nearly one and half decades later, it is on ventilator support.
Nirmala Sitharaman takes crypto fight to Global level
Recent months have been confusing for the crypto world. On one hand, the Indian government decided to collect tax from them, while on the other hand, the Ukraine-Russia crisis damaged their production line and ended up halting their generation. The crackdown by China and some other countries ruined the crypto market further.
Now, they are in for a rude shock. Nirmala Sitharam, India’s Finance Minister has decided to galvanise countries against the misuse of cryptocurrencies. During her address at a seminar during the spring meet of the International Monetary Fund (IMF), Finance Minister said, “I think the biggest risk for all countries across the board will be the money laundering aspect and also the aspect of currency being used for financing terror.”
Nirmala Sitharaman is realistic in her approach towards cryptos. She knows that due to open cross-border exchange, it is not possible for one country to outrightly take an action on it. Any attempt to curb it by one country will only lead to more market space for it in another unregulated geography.
“I think regulation using technology is the only answer. Regulation using technology will have to be so adept, that it has to be not behind the curve, but be sure that it is on the top of it. And that’s not possible. If any one country thinks that it can handle it. It has to be across the board,” added Nirmala.
NFTs register huge decline
Meanwhile, Crypto Market also looks in shambles. Non-fungible tokens, once a hotbed of crypto enthusiasts, only witnessed declines during recent times. The year 2022 has proved to be the worst year for NFTs, which did not have any realistic value, to begin with. In January, NFT sales reached their absolute zenith, but it’s only downhill from there.
In January this year, NFTs worth $4.62 billion were sold all around the world. It registered an abnormal slump in February, when NFTs only worth $2.99 billion were sold. The sales further declined in March, with the third month of year witnessing the sales of NFTs worth only $2.44 billion.
Relation between NFTs and Cryptos
NFTs are fundamentally non-reproducible tokens. If you have bought an NFT, you cannot interchange it with anyone else. It’s you who will exercise full authority over it. If you have sold your NFT to someone then he/she becomes the owner of that very NFT. Moreover, the ownership of an NFT can be tracked by anyone as it is a piece of publicly available information on a digital ledger. A wide variety of products can be sold through NFTs. These include photos, videos, GIFs, movies, drawings, audio etc.
Cryptocurrency and NFTs are interlinked to a large extent. Though, people can buy NFTs using Fiat Currency like Rupee, Dollar, most of the buyers choose cryptocurrency to buy NFTs. Moreover, if a team which has its cryptocurrency also has NFT projects, then that currency is considered to be more stable than those not having NFTs.
Consider that there are two cryptocurrencies A and B, launched by two teams named X and Y. If team X has launched NFTs along with cryptocurrency A, and team Y has only cryptocurrency B to its credit and no NFTs; then in that case Cryptocurrency A will be called more stable and will attract higher prices.
Confusion regarding legality in India
The decline in sales volume of NFTs directly translates to decline in the values of cryptocurrencies in their respective markets. It is evident from recent activities in the crypto market. Most of the coins are stuck in a fixed price range and have been unable to break away from that.
Cryptos’ problems have been exacerbated by looming confusion about its legality in India.
Though, India has imposed a tax on people trading in cryptos, it does not automatically translate into Cryptos getting legalised. It simply means that there is an activity going on inside Indian geographical boundaries and India is just collecting its tax. The Modi government holds power to declare it illegal whenever it wants.
Cryptos are a threat to sovereignty of nation. No matter how bad a sovereign financial institution is, people have the power to question it and drag it into the Court of Law. It is not true for Cryptos as most of the time, people do not even know who is the owner of an individual crypto coin. This is exactly what is going to be its Achilles hill.