A bulletin listing on the Indian Parliament’s website said the government intends to introduce a bill to ban most private cryptocurrencies during the upcoming winter session on November 29. It is among the 26 bills set to be presented during the session.
The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 aims to “create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India.” The RBI is weighing the feasibility of launching its own digital currency but it is yet to announce the launch date for the project.
The RBI has previously expressed concerns over the use of cryptocurrencies, saying they are detrimental to the sovereign right of India, as they assign the right to make such currency to private entities. It has also said that the volatility of cryptocurrencies could destabilise the economy. Furthermore, the RBI has highlighted the increased risk of money laundering and terror financing due to the anonymity of transactions.
While the Bill will prohibit all private cryptocurrencies, the bulletin said it would also create exceptions to “promote the underlying technology of cryptocurrency and its uses.” No further details were given about the bill in the bulletin. Following the bulletin release, the crypto market saw a major crash, with all crypto prices dropping by at least 15%. Bitcoin crashed by 17%, while Ethereum and Polkadot dropped 14% each. Further, Dogecoin prices fell by 20%.
Read more: PM Modi Asserts Need to Prevent Misuse of Cryptocurrency at Sydney Dialogue
The announcement comes weeks after Prime Minister Narendra Modi conducted a comprehensive review to determine the way forward regarding cryptocurrency. The discussions saw the participation of several senior representatives of the RBI and the ministries of home affairs and finance. Following the meet, government sources stated that the Modi administration is trying to adopt “forward-looking and progressive” measures to regulate cryptocurrency.
Later, the Parliament’s standing committee on finance was convened to gather the opinions of various industry stakeholders, who said there is a need to regulate cryptocurrency, given that cannot be stopped at this stage. The meeting also included discussions on security and investor protection concerns.
In fact, Modi has laid the groundwork for the upcoming bill in both domestic circles and international platforms. During his address at the Sydney Dialogue last Thursday, he said it is important for democracies to collaborate to prevent the misuse of digital currencies. The Indian PM also warned against the inappropriate advertising on cryptocurrency that can mislead the youth.
With India estimated to have the largest number of cryptocurrency users in the world, it remains an unregulated asset. However, the Indian Finance Ministry has not provided much detail on the specifics of the bill, drawing concern from investors and industry stakeholders.