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 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.
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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