India is back at it with crypto after its government said it would introduce a new bill to regulate digital currencies in the Winter session of Parliament. A report unveiled this news on November 24, noting that this bill will effectively call for the banning of most private cryptocurrencies. However, the bill will exempt specific cryptos that promote the blockchain and its use cases.
According to the report, the Cryptocurrency and Regulation of Official Digital Currency Bill of 2021 will also see India create a framework for its official digital currency, which the Reserve Bank of India (RBI) will issue as early as December this year. Allegedly, RBI seeks to create a digital currency (CBDC) to protect the Indian economy against the risks emanating from private cryptos.
While the country seeks to ban private cryptos, its bill is open to interpretation because it does not specify which digital assets fall under private cryptos. As for the government making some exceptions, it is unclear which coins will survive the ban, seeing as leading cryptos like Bitcoin (BTC) and Ethereum (ETH) run on the blockchain.
This news comes after RBI barred local banks from offering services to crypto-affiliated companies in 2018 on the grounds of maintaining consumer protection and market integrity. However, the Supreme Court of India ordered RBI to lift the ban in the past year, allowing crypto firms in the country to heave a much-needed sigh of relief.
While things quieted down afterward, the Indian government tried criminalizing the possession, issuance, mining, trading, and transference of crypto earlier this year. However, the government did not create a bill to introduce these policies.
With this approach amounting to nothing, the government allegedly sought to start fining anyone that holds crypto in India. However, these fines have not yet materialized, and some top government officials assumed an open approach to crypto.
For instance, India’s Finance Minister, Nirmala Sitharaman, said the government would not shut off all options regarding crypto. Per Nirmala, the country plans to leave a window for citizens to interact with Bitcoin and the blockchain.
On the other hand, Prime Minister Narendra Modi recently called on democratic nations to work together on reining in the crypto sector to ensure it does not end up in the wrong hands, which can spoil the youth.
Crypto adoption spikes in India
India’s decision to ban digital currencies comes after a considerable chunk of its population warmed up to crypto this year. Although the government does not keep records of how many people have embraced cryptos, the number ranges between 15 million and 20 million citizens.
Reportedly, these people have invested approximately 400 billion rupees ($5.39 billion) in crypto. Investor interest in the Indian crypto space also soared, with leading crypto exchanges, such as CoinSwitch Kuber and CoinDCX, surpassing valuations of $1 billion after securing funding from renowned investors like Coinbase Ventures and Andreessen Horowitz.
Urging Indians to hold the line, Nischal Shetty, the founder and CEO of WazirX, tweeted,
“This is not the end but the beginning of crypto regulations in India Industry has had the opportunity to present. Law makers understand the growing market. Over 15M+ people own crypto in India There are ways to curb the bad activities and promote innovation Don’t panic.”