India’s proposed ban on cryptocurrencies: What you need to know

As per some reports, there is a rumour that India might be passing a bill to ban cryptocurrencies. While there’s no clarity on the same – and we’d suggest you wait for official details – the news has definitely shocked the crypto enthusiasts and traders in the subcontinent. Here’s what we know so far about the proposed “The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021”.

Interestingly, when it comes to cryptocurrencies, India has had a love and hate relationship. It was in April 2018 that India’s banking regulator RBI announced that cryptocurrencies aren’t a legal tender. Finally, in March 2020, Supreme Court, the apex legal body, lifted the ban. So, it’s evident that the Indian government wants the best for its people and ensure that there are no scams, or get rich quick schemes fooling unaware users.

Coming back to the bill that has been proposed in the winter session of the parliament, it reads:

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.

And the aim of the session would be “introduction, consideration and passing” for this bill. Now, there’s not much to discuss basis this statement, for the bill may not get a go ahead in the parliament. And even if it does, there’s a lot of clarification needed.

The biggest point being that there’s no concept of private cryptocurrencies. They are by nature, public virtual currencies, as you may have read in What is cryptocurrency article. The same point was made by Nischal Shetty, CEO of WazirX, one of the largest cryptocurrency exchanges in India.

Furthermore, the statement itself suggests that there could be some exceptions which indicate that the government is aware of the benefits of blockchain technology. Furthermore, it’s crystal clear that the Indian government wants to create its own digital currency, which will be backed by RBI.

It’s also worth noting that the country will involve all the players in the ecosystem before taking such a huge step. CoinDCX’s CEO Sumit Gupta highlighted the same thing.

So what should you do right now? We can hope to get some clarity on February 1st when the Indian government will be announcing the union budget. Until then, it’s better to stay positive and avoid causing any panic. The fact that the country does understand that cryptocurrencies and blockchain tech are game-changers is a big deal in itself.