India plans to introduce law to ban Bitcoin, other private cryptocurrencies – TechCrunch
India plans to introduce a law to ban private cryptocurrencies such as bitcoin in the country and provide a framework for the creation of an official digital currency during the current budget session of parliament.
In the agenda (PDF) published on the lower house website, the legislation seeks to “prohibit all private cryptocurrencies in India,” but allow “for certain exceptions to promote the underlying technology [blockchain] of cryptocurrency and its uses.”
The law also seeks to “create a facilitative framework for creation of the official digital currency” that will be issued by the nation’s central bank, Reserve Bank of India, the agenda said.
In 2018, an Indian government panel recommended banning all private cryptocurrencies and proposed up to 10 years of jail time for offenders. The panel also suggested the government to explore a digital version of the fiat currency and ways to implement it.
At the time, RBI said the move was necessary to curb “ring-fencing” of the country’s financial system. It had also argued that Bitcoin and other cryptocurrencies cannot be treated as currencies as they are not made of metal or exist in physical form, nor were they stamped by the government. The 2018 notice from the central bank sent a panic to several local startups and companies offering services to trade in cryptocurrency. Nearly all of them have either since closed shop, or pivoted to serve other markets.
This proposal was challenged by several exchanges and traders, who filed a lawsuit in the Supreme Court. The nation’s apex court ruled in their favor last year. This ruling was seen as “historic” but it did not impact the earlier circular on the policy level.
“Since the government is considering introducing the bill during this session of Parliament, we are sure the government will definitely listen to all the stakeholders before taking any decision,” said Sumit Gupta, co-founder and chief executive of CoinDCX,a cryptocurrency exchange in India.
“We are talking to other stakeholders and will definitely initiate deeper dialogue with the government and showcase how we can actually create a healthy ecosystem in unison,” he said.
India might ban private cryptocurrencies like bitcoin and develop a national digital coin
India’s government plans to introduce a bill in the country’s lower house that would ban private cryptocurrencies such as bitcoin and create a national cryptocurrency.
The so-called “Cryptocurrency and Regulation of Official Digital Currency Bill” moves “to create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India.”
Additionally, “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.”
Fronted by Prime Minister Narendra Modi, the right-wing Bhartiya Janata Party currently have control of India’s two houses of Parliament (the Lok Sabha and the Rajya Sabha), giving the legislation a strong possibility of passing.
India’s Proposed Crypto Ban Has Investors Nervous, May Feed Anti-Bitcoin Narrative
India’s cryptocurrency investors were caught off-guard and left confused after news broke Friday that the country’s Parliament will be considering a government-backed bill that would ban “private” cryptocurrencies. Given the ruling party controls both houses of Parliament, the bill’s chances of becoming law are good.
The Cryptocurrency and Regulation of Official Digital Currency Bill 2021 would prohibit cryptocurrencies in India and provide a framework for creating an official digital currency to be issued by the Reserve Bank of India (RBI). The RBI had previously prohibited crypto trading for almost two years before that ban was overturned by the Supreme Court in March 2020.
Industry watchers said the government’s definition of “private” could imply that any digital currency that is not sovereign could be seen as a “private” currency, including bitcoin. It’s unclear which cryptocurrencies would be affected as the bill it allows for certain unspecified exceptions to promote the underlying technology of cryptocurrency and its uses
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“This is (the) time to be nervous,” an official at a large cryptocurrency exchange said to the Economic Times of India on the condition of anonymity.
The move is bound to make potential and current crypto investors outside the country nervous as well. When naming potential obstacles to the growth of bitcoin as a store of value, that governments will try to ban it should it become too successful almost always makes the list. This past week, while appearing more warmly disposed toward bitcoin than he had in the past, Ray Dalio, the founder and co-chairman of Bridgewater Associates, the world’s largest hedge fund, listed government prohibition of bitcoin as one of his remaining concerns regarding the cryptocurrency. That one of the world’s biggest economies seems poised to do just that is only going to feed that narrative. News of the likely ban may have been a contributing factor in the fallback in the price of bitcoin Friday after it had risen in response to Elon Musk’s Twitter-bio shoutout.
Nischal Shetty, CEO of Mumbai-based cryptocurrency exchange WazirX criticized the announcement via Twitter, explaining “there is no such thing as a private cryptocurrency” and the bill is aimed at helping the RBI create its own central bank digital currency (CBDC) by banning so-called private cryptocurrencies with some exceptions.
“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,” said Shetty.
Adding that just because a bill is presented does not mean it will be cleared and warned, “wrong or hasty regulations will set us [India] back by a decade. Right regulations will catapult India to the forefront of this technology.”