According to some media sources, on 29 November, when the winter session of parliament begins, the Indian government may propose a new ban on private cryptocurrencies.
The bill establishing a new crypto ban in India
According to a bulletin published on Lok Sabha, the official website of the Indian parliament, The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, which is expected to be debated in parliament, would aim to create a legislative situation that could facilitate the creation of a Central Bank Digital Currency (CBDC).
The statement reads:
“The Bill also seeks to prohibit all private cryptocurrencies in India. However, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses”.
This comes as a surprise since in the past few days, the risk that cryptocurrencies might be banned seemed to have been averted, except for the possibility of discussing a draft bill to regulate them.
After these rumours, cryptocurrency prices plummeted on Indian cryptocurrency exchanges. Bitcoin fell more than 13% on WazirX, while Shiba Inu and Dogecoin were down more than 15%. These price movements were limited to Indian trading platforms, while on international platforms Bitcoin was largely unchanged
Former finance secretary Subhash Chandra Garg told IANS that cryptocurrencies do not work and provide services only as currencies:
“When you ‘ban’ crypto currencies what exactly do you ban? Similarly, what are the permissible exemptions? Do you permit crypto currencies to make in platform payments the largest exemption issue? What is the manner you permit purchase of exempted cryptocurrencies for exempted use by sovereign currencies?”.
Too much uncertainty in India over crypto assets
Uncertainty seems to reign supreme in India when it comes to cryptocurrencies. While both the Indian prime minister and the central bank president have consistently warned of the risks associated with the crypto world, many Indians have enthusiastically embraced cryptocurrencies.
Approximately 15 million Indians use or trade in cryptocurrencies. And there are ever more Indian crypto and blockchain start-ups that are developing, also taking advantage of this legislative vacuum, with all the risks that this entails.
New Delhi-based IT law expert Virag Gupta told Indian news agency IANS recently that the delay in enacting a law has provided an opportunity for some exchanges to create a parallel cryptocurrency empire:
“Non-regulation of cryptocurrency is creating a big risk to national security and individual investors in India. The bill should give legal protection to the Blockchain technology and the official digital currency of the country”.
It remains to be seen whether a new phase, one way or the other, could finally begin for the crypto world in India on 29 November.