The government is likely to introduce a bill during Budget session 2021 that would ban private cryptocurrencies, including Bitcoin. The government aims to introduce an official digital currency that would be directly issued by the Reserve Bank of India. The bill to ban cryptocurrencies is among the 20 bills that the government wants to produce during the Union Budget, which will be presented on February 1.
The bill is titled ‘The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021’. “To create a facilitative framework for creating the official digital currency to be issued by the Reserve Bank of India. 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,” the government booklet read.
“Private digital currencies have gained popularity in recent years. In India, the regulators and governments have been sceptical about these currencies and are apprehensive about the associated risks. Nevertheless, RBI is exploring the possibility as to whether there is a need for a digital version of fiat currency and, in case there is, how to operationalize it,” it noted.
Earlier in 2018, the Reserve Bank of India had banned crypto transactions and alerted all banks to stop dealing with private cryptocurrencies. This halted cryptocurrency trading in India. However, in 2020, the Supreme Court order squashed the central bank’s order on the grounds of disproportionality. A bill was drafted in 2019 that proposed 10-year prison for people who sold or dealt with cryptocurrencies including Bitcoin.
Reacting to the latest bill the government plans to introduce, Nischal Shetty, Founder of Bitcoin and cryptocurrency exchange WazirX said, “There’s no such thing as a “private cryptocurrency”.Crypto by their very nature are decentralized and public. I hope this is with respect to “currency” usage and they’re focusing on that. Attacking digital assets by confusing them to be INR competitors wud be amateurish. A country as large as India should at least work on understanding the underlying terminologies before presenting Technology related bills in Parliament. Seems like a hurried move.
If done wrong, this can potentially destroy a lot of value held by the general public.”
In January, Bitcoin witnessed a surge. It traded as high as $38,000 (roughly Rs 24.3 lakhs) in Asia.