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Government seeks to ban all private cryptocurrencies in India

A bill scheduled to be introduced in the winter session of Parliament aims to create a framework for the creation of the official digital currency to be issued by the Reserve Bank of India

The government of India has said that it will bring a bill in the winter session of Parliament to ban all private cryptocurrencies in India, barring a few exceptions, and create a framework for the creation of the official digital currency to be issued by the Reserve Bank of India (RBI).

The bill seeks to "create a facilitative framework for the creation of the official digital currency to be issued by the RBI”. 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.

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The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, is listed for introduction in the Lok Sabha during the winter session, scheduled to start from November 29.

The Reserve Bank has voiced "serious concerns" about private cryptocurrencies.

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Industry estimates suggest there are 15 million to 20 million crypto investors in India, with total crypto holdings of around ₹ 40,000 crore ($5.39 billion).

Recently, there have been a rising number of advertisements promising easy and high returns on investments in cryptocurrencies, amid concerns over such currencies being allegedly used for luring investors with misleading claims.

In response, all major digital currencies saw a fall of around 15% and more, with Bitcoin down by around 18.53%.

Last week, the first-ever Parliamentary panel discussion on cryptocurrency was conducted, where a consensus was reached that cryptocurrency cannot be stopped in India, but must be regulated.

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The standing committee on finance meeting was chaired by BJP's Jayant Sinha, who met the representatives of crypto exchanges, Blockchain and Crypto Assets Council (BACC), industry bodies, and other stakeholders on November 16.

Prime Minister Narendra Modi had also chaired a high-level meeting with officials from various ministries and the Reserve Bank of India (RBI) on the issue. PM Modi urged democratic nations to cooperate in regulating private virtual currencies failing which they could land up in the “wrong hands”.

In a speech at the Sydney Dialogue delivered last Thursday, PM Modi said it was important to ensure the digital currencies should not be used in an unlawful manner as it could spoil the youth.

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