Do you know?

• The legal status of cryptocurrency in India is uncertain.
  • RBI has warned against cryptocurrencies, citing risks to investors and confirming they are not legal tender. 
• In 2018, the Supreme Court overturned an RBI ban on financial institutions dealing with cryptocurrencies.
• In the 2022-23 Union Budget, the Government of India announced a 30% tax on cryptocurrency transfers.
• Additionally, a panel has been formed to explore blockchain technology and the potential for a Central Bank Digital Currency (CBDC).

• A strategic reserve is a stockpile of critical resources, used in times of crisis or disruptions in supply.
• Examples:
  • US Strategic Petroleum Reserve: Largest global emergency oil stockpile, created in 1975 after the 1973-74 oil embargo.
  • Canada’s Maple Syrup Reserve: The only global strategic reserve for maple syrup.
  • China’s Reserves: Includes resources like metals, grains, and pork.

• Establishing the Reserve: Unclear if it would require executive powers or Congress approval. Some suggest an executive order to manage bitcoin through the U.S. Treasury’s Exchange Stabilization Fund.
• Content of the Reserve: Includes seized bitcoin (200,000 tokens, worth approx. $21 billion).
• Additional Purchases: Possible purchase of more bitcoin from the open market.

• Global Market Dominance: Could enhance U.S. control over the global bitcoin market, especially against competitors like China.
• Economic Advantages: Could reduce U.S. fiscal deficit and strengthen the U.S. dollar.

Risks:

• Volatility: Bitcoin’s value is uncertain due to volatility and lack of intrinsic use.
• Security: Vulnerability to cyber-attacks and market fluctuations.