India’s cryptocurrency investors have been caught off guard and left confused after news broke Friday that the country’s parliament will consider a bill being considered by the government that would ban ‘private’ cryptocurrencies. Since the ruling party controls both houses of parliament, the chances are good that the bill will become law.
The Cryptocurrency and Regulation of Official Digital Currency Bill 2021 bans cryptocurrencies in India and provides a framework for creating an official digital currency to be issued by the Reserve Bank of India (RBI). The RBI had previously banned cryptocurrency trading for almost two years before the ban was overturned by the Supreme Court in March 2020.
Industry observers said the definition of ‘private’ could imply to the government that any digital currency that is not sovereign can be seen as a ‘private’ currency, including bitcoin. It is unclear which cryptocurrencies will be affected, as the bill allows certain unspecified exceptions to advance the underlying technology of cryptocurrency and its use.
“It’s (the) time to be nervous,” an official at a major cryptocurrency exchange told the Economic Times of India on condition of anonymity.
The move is also likely to make potential and current crypto investors outside the country nervous. In naming potential obstacles to the growth of bitcoin as a valuable stock, governments will try to ban it if it is almost always successful. Ray Dalio, the founder and co-chair of Bridgewater Associates, the world’s largest hedge fund, last week, although he had a warmer sense than he had before, called the government’s ban on bitcoin as one of remaining concerns regarding the cryptocurrency. That it seems to be one of the largest economies in the world to do so is only going to feed the narrative. The news of the likely ban was possibly a contributing factor in the setback in the price of bitcoin Friday after it rose in response to Elon Musk’s Twitter bio call.
Nischal Shetty, CEO of Mumbai-based cryptocurrency exchange WazirX, criticized the announcement via Twitter, a private cryptocurrency does not exist, and the bill aims to help the RBI create its own central bank’s digital currency (CBDC) by banning so-called private cryptocurrencies with a few exceptions.
” A country as big as India needs to at least work on understanding the underlying terminologies before technology-related bills are introduced in parliament seems like a hasty step, ” Shetty said.
If a bill is presented, it does not mean that it will be cleared and warned, ‘wrong or hasty regulations will determine us [India] back with a decade. Real regulations will put India at the forefront of this technology. ”
If the bill becomes law, India would become the only major Asian economy to ban private cryptocurrencies rather than regulate them like corporate stocks.