India’s cryptocurrency investors were caught off guard and confused after news that the country’s parliament will be considering a government-backed bill that would ban “private” cryptocurrencies. Given that the ruling party controls both houses of parliament, the chances of the bill becoming law are good.
Cryptocurrency and the Official Digital Currency Law Regulation 2021 would ban cryptocurrencies in India and provide a framework for creating an official digital currency to be issued by the Reserve Bank of India (RBI). The RBI had banned the crypto trade for almost two years before that ban was lifted by the Supreme Court in March 2020.
Industry watchers said the government’s definition of “private” may imply that any digital currency that is not sovereign can be seen as a “private” currency, including bitcoin. It is unclear which cryptocurrencies would be affected, as the bill allows for certain unspecified exceptions to promote the underlying cryptocurrency technology and its uses
“This is the time to be nervous,” an official at a large cryptocurrency exchange told the Economic Times of India on condition of anonymity.
The move should also make potential and current crypto investors abroad nervous. By naming potential obstacles to bitcoin’s growth as a store of value, governments will try to ban it if it becomes very successful almost always makes the list. Last week, although he seems warmer about bitcoin than in the past, Ray Dalio, the founder and co-president of Bridgewater Associates, the world’s largest hedge fund, listed the government’s ban on bitcoin as one of his remaining concerns. in relation to cryptocurrency. The fact that one of the largest economies in the world seems prepared to do just that will only feed this narrative. News of the likely ban may have contributed to the bitcoin price drop on Friday, after rising in response to Elon Musk’s message on Twitter-bio.
Nischal Shetty, CEO of the Mumbai-based cryptocurrency exchange, WazirX, criticized the announcement via Twitter, explaining that “there is no private cryptocurrency” and the bill aims to help the RBI create its own central bank digital currency (CBDC), banning so-called private cryptocurrencies, with a few exceptions.
“A country as big as India must at least work on understanding the underlying terminologies before presenting technology-related bills in Parliament – it seems like a rushed move,” said Shetty.
Adding that just because a bill is presented does not mean it will be passed and warned, “wrong or hasty regulations will define us [India] in a decade. The right regulations will catapult India to the forefront of this technology. ”
If the bill becomes law, India will become the only major Asian economy to ban private cryptocurrencies instead of regulating them as corporate actions.