Is India About to Ban Cryptocurrency? Here’s What We Know
India may be getting ready to ban all cryptocurrency.
According to an official bulletin published by the Indian Parliament, the political institution is considering introducing legislation that would prohibit all private cryptocurrencies while creating the infrastructure for a digital rupee.
According to the Lok Sabha Bulletin, the legislation by the name of “Cryptocurrency and Regulation of Official Digital Currency Bill, 2021” would ban private cryptocurrencies but, “it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.”
As both houses of the Indian Parliament are under the rule of the governing party, the legislation will likely be approved without much difficulty, converting India into the first major Asian economy to ban crypto instead of regulating it.
India May Go For a Full Ban
The intents behind the proposed legislation seem to be cracking on scammers using cryptocurrencies like Bitcoin and Monero, but experts disagree if the move would prove to be effective in doing so as only legitimate uses of crypto can be easily banned.
The proposal also aims to establish a framework for the creation of an official digital currency to be issued by the Reserve Bank of India (RBI), an interest consistent with other governments’ efforts to explore the creation of Central Bank Digital Currencies (CBDC).
The topic of CBDCs has become increasingly popular over the last year with central banks and policymakers, who have little control over the most popular cryptos – like Bitcoin.
A Complicated History
The Indian government has historically had a complicated relationship with cryptocurrencies with the RBI having banned all banks from dealing with crypto-related firms, just to have the decision reversed by the Supreme Court 2 years later.
The government has not taken any further moves toward the regulation of the cryptocurrency industry in the country ever since, but there were reports in August of 2020 indicating that a ban was being considered.
While there are no specifics yet on how the legislation would implement the ban of cryptocurrencies in the country and what the exceptions would be, Indian stakeholders are already considering the potential ramifications of such legislation.
India has become one of the most important economies in the world due to its growing IT industry, which has also gotten closer to blockchain technology and cryptocurrency in recent years, making a blanket ban unlikely.
Getting Ready for a Digital Rupee
While the bill contemplates the prohibition of private cryptocurrencies in the country, its main focus is, “To create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India.”
The RBI had already shown interest in the creation of CBDC back in 2020, when it disclosed having discussed the topic with other governments and central banks and stated that it, “is exploring the possibility as to whether there is a need for a digital version of fiat currency and in case there is, then how to operationalize it.”
The bulletin suggests that the RBI has already decided there is a need for a Digital Rupee and has started following the growing trend of transitioning towards digital currencies.
Multiple European have been vocal about their interest in developing a digital Euro and have started running experiments in partnership with experts in blockchain experts to explore the potential of the technology.
Italy and the Netherlands are some of the countries already taking steps in proposing legislation that would work as the work-frame for future CBDCs, which is the step India would be following with the introduction of this legislation.
Recently the French National Bank successfully completed the testing of a CBDC prototype by completing its first transaction in collaboration with SETL, CITYGROUP, and other important companies in the country.
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