Budget 2021: Centre lists bill to ban all cryptocurrencies in India, create official digital currency
Image Source : INDIA TV Budget 2021: Centre lists bill to ban all cryptocurrencies in India, create official digital currency
In this Budget 2021 session, the Centre plans to introduce a bill to ban the all cryptocurrencies in India such as Bitcoin. The government will also put in place the framework for an official digital currency to be issued by the Reserve Bank of India.
This is among 20 new bills, which the Government intends to introduce this Union Budget, which will be presented on February 1.
The new bill has been titled as ‘The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021’. The Centre is looking towards the introduction, consideration, and passing of this bill.
“To create a facilitative framework for creation of 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 crytptocurrency and its uses,” purport of the bill as mentioned in Lok Sabha bulletin said.
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Issued on 25th Jan, RBI booklet on payment systems also showed that the central bank is exploring whether to issue a digital version of the rupee.
“Private digital currencies have gained popularity in recent years," the central bank booklet said.
“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.
The RBI had in 2018 effectively banned crypto transactions and had asked all regulated entities, such as banks, to stop any dealings related to private cryptocurrencies as part of that order. This brought cryptocurrency trading in India to a halt.
However, that embargo was overturned in March 2020 by the Supreme Court bench, headed by Justice Rohinton F Nariman, quashed the central bank’s circular on grounds of disproportionality.
Meanwhile, the price of Bitcoin, the most popular crypto currency, surged to as high as $38,000 attracting more and more people to invest in them. Now the price has come down to around $33.8 thousand.
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India Would Ban Private Cryptocurrencies Under Proposed Legislation
The Indian Parliament will consider a government-introduced bill that would ban private cryptocurrencies in its upcoming budget session. Given the ruling party controls both houses of Parliament, the chances of the bill’s passage are considered good.
According to the Lok Sabha Bulletin published Friday, the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, seeks to prohibit all cryptocurrencies in India and provide a framework for creating an official digital currency to be issued by the Reserve Bank of India (RBI).
While the bill is anti-private cryptocurrencies, it will allow certain exceptions to promote the underlying technology of cryptocurrency and its uses, the bulletin said. The India Parliament has three annual sessions: Budget session, which runs from January to March, Monsoon session, and Winter session.
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If the bill is approved, India would become the only major Asian economy to ban private cryptocurrencies rather than regulate. A bitcoin by regulating it like a corporate stock and officially recognize cryptocurrency-based crimes.
The RBI, via a circular issued on April 6, 2018, had banned regulated entities from dealing in cryptocurrencies and providing services for facilitating any person or entity in dealing with or settling those. The central bank’s banking ban was overruled by the Supreme Court in March 2020, bringing cheer to exchanges providing services to India-based clients.
Government to introduce bill to ban cryptocurrency in Budget Session
The government is to introduce a bill to ban, with exceptions, the trading in cryptocurrencies in India and also put in place the framework for an official digital currency to be issued by the Reserve Bank of India.
The move is likely to end ambiguity on cryptocurrency which is neither banned nor legalised in India. The RBI had banned banks from dealing with crypto exchanges but that embargo was overturned in March 2020 by the Supreme Court of India.
The Regulation of Official Digital Currency Bill, 2021 is likely to be introduced in the Budget Session of the Parliament, a Lok Sabha bulletin has said.
“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,” CNBC TV18 quoted the bill as saying.
Read | Bitcoin: Beyond the bubble
The bill, if passed, will prohibit the use of cryptocurrency as legal tender and currency. Additionally, cryptocurrency will be kept out of the payments system.
The Centre is likely to name RBI as the regulator and Enforcement Directorate as the investigating authority for offences under the cryptocurrency bill.
Read: Should you invest in cryptocurrency?
Earlier, an RBI booklet on payment systems, released on January 25, stated that the central bank is exploring whether to issue a digital version of the rupee.
“Private digital currencies (PDCs)/virtual currencies (VCs)/cryptocurrencies (CCs) 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,” said the booklet titled ‘Payment and Settlement Systems in India’.
Also read: RBI’s proposed digital currency project and what it means for you
“Nevertheless, the RBI is exploring the possibility as to whether there is a need for a digital version of fiat currency and in case there is, then how to operationalise it,” it added.
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The SC ruling that overturned the RBI ban allowed crypto exchanges to restart operations in the country and dip into the booming crypto trading business in the world. Players like WazirX, Unocoin and Zebpay have recorded a massive jump in trading volumes.
The value of all cryptocurrencies earlier this year surpassed the $1 trillion mark and Bitcoin crossed the $40,000 mark.