The Government of India will pass a bill to ban all private cryptocurrencies in the winter session of Lok Sabha, which is scheduled to begin on November 29th, 2021. Soon after the announcement of the proposed bill, massive amounts of panic selling led to the crash of WazirX, which is India’s biggest cryptocurrency exchange.
Since cryptocurrencies are volatile, unregulated, and carry cyber-security risks like loss or destruction of the private key, the Indian government has been continuously warning the citizens from investing in cryptocurrencies. In addition, the International Monetary Fund (IMF) had stated that since crypto-assets have the potential to disrupt different aspects of the global financial system, they should be monitored closely.
The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 will be introduced in the Lok Sabha later this month. If the bill is passed, it may only ban private cryptocurrencies such as Monero, Dash, Zcash and so on.
The government has not clearly mentioned the definition of private cryptocurrency yet. Hence, it is unclear whether it will allow people to trade Bitcoin, Ether, and so on which are public block-chain based cryptocurrencies.
According to a bulletin issued by the Lok Sabha, it will allow certain exceptions to promote the underlying technology of cryptocurrency and its uses.” It further said that it seeks “to create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India.”
The RBI fears that it may create economic balance as it can impact inflation and forex. A blanket ban is expected to stop crypto exchanges and other risks associated with it. Meanwhile, supporters of the unregulated exchanges are lobbying against its outright ban by campaigning for including in a regulatory system.
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