Key Highlights:
- The Indian government is still attempting to outlaw most cryptocurrencies through a long-awaited cryptocurrency bill that will be introduced this year.
- After the bill was revealed, cryptocurrency values plummeted on Indian crypto exchanges.
- As stated in the official bulletin, the framework aims to pave the road for RBI-issued digital money.
Bill to ban private cryptocurrencies
The Indian government is still attempting to outlaw most cryptocurrencies through a long-awaited cryptocurrency bill that will be introduced this year during Parliament’s so-called “Winter Session.”
The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, proposes to create a framework that would ease the formation of a central bank digital currency, according to a bulletin issued on the official website of the Indian parliament, Lok Sabha (CBDC).
“The Bill also seeks to prohibit all private cryptocurrencies in India. However, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses,” according to the bulletin.
Cryptocurrency values decline
After the bill was revealed, cryptocurrency values plummeted on Indian crypto exchanges. Bitcoin dropped more than 13% on WazirX, while shiba inu and dogecoin both dropped more than 15% in the hours after the news. However, these price movements were restricted to Indian trading platforms, with bitcoin remaining in the green on non-Indian platforms.
While the law looks to be virtually the same as the draft bill presented in January, it is uncertain whether the two are identical because the more recent draught is not yet publicly available. However, in recent months, there has been speculation that the government has softened its stance on cryptocurrency and may attempt to have cryptocurrencies regulated as assets rather than a form of payment.
According to a video report by India Today, crypto trading is expected to continue under the proposed bill as long as people purchase from crypto exchanges that fulfill specific conditions. According to the source, the measure may focus more on limiting who is permitted to develop or issue new cryptocurrencies in order to safeguard investors.
RBI to issue its own digital currency
The Reserve Bank of India (RBI), the country’s central bank, is known to be skeptical about cryptocurrency. The Supreme Court of India overturned a two-year ban on crypto trading set by the Reserve Bank of India in March 2020, and the central bank initially planned to appeal the decision. Last week, RBI Governor Shaktikanta Das stated that the central bank has “severe concerns about macroeconomic and financial stability” and that blockchain technology may prosper in the absence of cryptocurrencies.
As stated in the official bulletin, the framework aims to pave the road for RBI-issued digital money. Local media reported earlier this month that the RBI hopes to launch a CBDC in 2022.
Meanwhile, the Indian government appeared to relax its stance on cryptocurrency earlier this month, implying that it will adopt a more progressive and forward-thinking approach to digital assets. However, in a speech last week, India’s Prime Minister Narendra Modi stated, “It is crucial that all democratic nations work together on this and guarantee that it does not wind up in the wrong hands, which might corrupt our youth.”
Despite signs that the law attempts to prohibit the use of private cryptocurrencies, Nischal Shetty, the founder and CEO of WazirX, one of India’s leading crypto exchanges, sees the bill as a step forward and a “huge moment” for India.
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