An official digital currency to be issued by the RBI might replace all private cryptocurrencies
The Government has released a bill banning “all private cryptocurrencies” in India and creating a basis for the development of an official digital currency to be issued by the Reserve Bank of India. Titled ‘Cryptocurrency and Control of the Official Digital Currency Bill, 2021,’ the bill will be debated at the present Parliament Budget Session. The RBI is now discussing the prospect of issuing a digital version of the cryptocurrency that could potentially become the digital currency of the country’s central bank (CBDC)—based on the technical history of the cryptocurrency.
While adequate specifics of the proposed reform have yet to be released, the government announced in the Lok Sabha bulletin on Friday that the bill was aimed at “creating a framework for facilitating the creation of the official digital currency” and “prohibiting all private cryptocurrencies in India.” However, there would be some exceptions that would be “promoting the underlying crypto technology.”
Notably, this is not the first time that the government has shown interest in banning cryptocurrencies in the nation. In April 2018, RBI essentially barred cryptocurrency transfers via banks and e-wallets. The decision was also initially supported by the Supreme Court, but it later quashed the circular issued by the Central Bank.
A similar bill was also drafted in 2019. A tribunal was set up recommending a 10-year term of imprisonment for individuals possessing, trading or engaging in cryptocurrencies, including Bitcoin. The government, however, did not put the plan into effect.
The latest spike in Bitcoin prices has attracted Indians—among their peers in other countries—to start investing in cryptocurrencies. Several citizens have already begun mining cryptocurrencies in the country to obtain any share from their increased acceptance. However, the boom of cryptocurrency trade has also contributed to an increase in fraud, as Bitcoin and other such currencies are not controlled like a conventional currency.
Experts agree that actually introducing a bill would not guarantee that it will be legal in the near future.
“Wrong or hasty regulations will set us back by a decade,” tweeted Nischal Shetty, Founder of Bitcoin and cryptocurrency exchange WazirX. “Right regulations will catapult India to the forefront of this [cryptocurrency] technology.”
The nation has WazirX, BuyUcoin, CoinDCX, and CoinSwitch Kuber, among others, as leading cryptocurrency networks that will have a direct effect on the government’s expected restrictions.
Vishal Gupta, the co-founder of the Bitcoin Alliance, expects that the blockchain company will continue—regardless of the government’s step.
Shivam Thakral, CEO of BuyUcoin, urged the government to give its opinion to all stakeholders before taking a decision.
Alongside the hunt for a way to block cryptocurrencies to some degree, the government is currently investigating the potential of a digital version of the rupia. In a booklet released earlier this week, the RBI noted that it was investigating whether there was a need for a digital version of the fiat currency and, if so, how to run it.
