NEW DELHI: In a move that may prove to be a big blow to those dealing in cryptocurrencies, the government of India has listed a bill for the banning of cryptocurrencies like Bitcoin, Ether, Ripple, etc. The bill will prohibit all private cryptocurrencies and introduce a framework for an official digital currency to be issued by the RBI.
The law will “create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India (RBI),” said the agenda, published on the lower house website on Friday.
The legislation, listed for debate in the current parliamentary session, seeks “to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses,” the agenda said.
A cryptocurrency exchange operator lauded the digital currency bill proposed by government while asking what the bill means by “private cryptocurrencies”.
“The digital currency bill to be introduced before the Lok Sabha is a welcome step forward. Its success will depend on the details, particularly the definition of what the bill calls “private cryptocurrencies”. This is not a common term. Bitcoin is not privately owned by anyone. It is a public good, like the internet,” said Rahul Pagidipati, ZebPay CEO.
Pagidipati explained that Bitcoin and most crypto assets are more like gold and not an alternative to government-issued legal tender. He emphasised that crypto assets and digital government currency can coexist and together, they can bring tremendous benefits to the Indian economy.
“We hope the Lok Sabha members and advisors will consult crypto and blockchain companies as they make their decisions. 7 million Indians have already invested in this new asset class. Millions more want the same opportunity to build wealth that investors in other countries already have. We have faith in the government and hope that this bill will move India forwards, not backwards,” Pagidipati sai in his statement.
In mid-2019, an Indian government panel recommended banning all private cryptocurrencies, with a jail term of up to 10 years and heavy fines for anyone dealing in digital currencies. The panel has, however, asked the government to consider the launch of an official government-backed digital currency in India, to function like bank notes, through the Reserve Bank of India.
The RBI had in April 2018 ordered financial institutions to break off all ties with individuals or businesses dealing in virtual currency such as bitcoin within three months. However, in March 2020, the Supreme Court allowed banks to handle cryptocurrency transactions from exchanges and traders, overturning a central bank ban had that dealt the thriving industry a major blow.
Governments around the world have been looking into ways to regulate cryptocurrencies but no major economy has taken the drastic step of placing a blanket ban on owning them, even though concern has been raised about the misuse of consumer data and its possible impact on the financial system.
With agency input.