Mark Weaden
The new cryptocurrency bill is right around the corner for India and will prohibit private crypto holdings
As it stands, there are no laws banning the use of cryptocurrencies in India. Prime Minister Narendra Modi has been pushing for more regulatory measures to be taken for digital currencies. A meeting was held last week between senior officials and it looks like they are moving to implement new regulations.
The government is likely to introduce a new cryptocurrency bill at the winter session of Parliament. The government will seek to find regulations for CBDCs issued by the Reserve Bank of India (RBI), as well as private cryptocurrencies. But, what are they?
What are private cryptocurrencies?
The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, will be reviewed by senior officials in the winter session, scheduled for the start of next week. Cryptocurrencies are well-advertised and you can see many campaigns promoting the use of digital currencies in India, but the government wants to bring some regulatory standards to proceedings.
As it stands, there is no law prohibiting any aspects of cryptocurrency. It’s clear the government is interested in adding some strong regulations to digital currency. The bill aims to “create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India. It 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".
While it’s clear the government wants to ban ‘private cryptocurrencies’ it remains unclear what they mean. What this may mean is that private cryptocurrencies are those that are not part of the mainstream within the industry. However, it may also mean that all digital currencies not registered by the government will be banned, which would be bad news for Indian crypto enthusiasts.
The Indian CBDC
It’s no secret that the government has aspired to create a national cryptocurrency for some time now, much like we recently saw in China with the creation and implementation of the Digital Yuan.
In fact, the finance minister reported in 2019 that “There is no fixed nominal value of these private cryptocurrencies i.e. neither act as any store of value nor are they a medium of exchange. Since their inception, cryptocurrencies have demonstrated extreme fluctuations in their prices. Therefore, the Committee is of clear view that the private cryptocurrencies should not be allowed. These cryptocurrencies cannot serve the purpose of a currency. The private cryptocurrencies are inconsistent with the essential functions of money/currency, hence private cryptocurrencies cannot replace fiat currencies”.
However, much has changed in the industry in the last 12 months and the whole landscape of crypto has been rewritten. What was once an underground industry has become the pioneer of fintech and is attracting investment from all kinds of industries.
