India’s cryptocurrency investors were unprepared and confused after it was revealed on Friday that the country’s parliament will be considering a government-sponsored bill banning “private” cryptocurrencies. Given that the ruling party controls both houses of parliament, the chances are good that the law will become law.
The cryptocurrency and the regulation of the Official Digital Currency Act 2021 would ban cryptocurrencies in India and provide a framework for the creation of an official digital currency to be issued by the Reserve Bank of India (RBI). RBI had previously banned crypto trading for nearly two years before that ban was lifted by the Supreme Court in March 2020.
Industry observers said the government’s definition of “private” could mean that any digital currency that is not sovereign could be considered “private” currency, including Bitcoin. It is unclear which cryptocurrencies would be affected as the bill allows certain unspecified exceptions to promote the underlying technology of the cryptocurrency and its uses
“This is (the) time to be nervous,” an official from a major cryptocurrency exchange told the Economic Times of India on condition of anonymity.
The move will make potential and current crypto investors nervous even outside the country. If governments label potential obstacles to Bitcoin’s growth as a store of value, they will seek to ban it if it becomes too successful. It’s almost always on the list. Last week, Ray Dalio, the founder and co-chair of Bridgewater Associates, the world’s largest hedge fund, cited the Bitcoin ban as one of his remaining concerns about Bitcoin, despite being more open to Bitcoin than he was in the past cryptocurrency . That one of the largest economies in the world appears ready to do just that will only fuel this narrative. News of the likely ban may have been a factor in Bitcoin’s price drop on Friday after it rose in response to Elon Musk’s Twitter bio shoutout.
Nischal Shetty, CEO of Mumbai-based cryptocurrency exchange WazirX, criticized the announcement via Twitter, stating that “there is no such thing as private cryptocurrency.” The bill is intended to help the RBI to create its own digital central bank currency (CBDC) by banning so-called private cryptocurrencies with a few exceptions.
“A country as big as India should at least work to understand the underlying terminology before putting technology-related bills in parliament – that seems like a hasty move,” Shetty said.
Adding just because an invoice is presented does not mean that it will be deleted and warned: “Wrong or hasty regulations will set us [India] back a decade. The right regulations will catapult India to the forefront of this technology. ”
When the law goes into effect, India will be the only major Asian economy to ban private cryptocurrencies instead of regulating them like corporate stocks.