Cryptocurrency Ban: India Plans to Introduce New Law Prohibiting All ‘Private Cryptocurrencies’
The government at the Centre is planning to introduce a new law banning all ‘private cryptocurrencies’ in the nation. Hoping that the government will listen to all the stakeholders before taking any decision, the industry stakeholders have come out in unison. Sumit Gupta, co-founder and chief executive of CoinDCX, a cryptocurrency exchange in India, said, “Since the government is considering introducing the Bill during this session of Parliament, we are sure the government will definitely listen to all the stakeholders before taking any decision.”
“We are talking to other stakeholders and will definitely initiate deeper dialogue with the government and showcase how we can actually create a healthy ecosystem in unison,” he said in a statement.
Among the bills lined up for consideration during the Budget Session of Parliament is the ‘Cryptocurrency and Regulation of Official Digital Currency Bill, 2021’ that will create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India. 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.
The Reserve Bank of India (RBI) is already exploring the possibility as to whether there is a need for a digital version of fiat currency and in case there is, then how to operationalise it. The RBI made the remarks in a booklet titled “Payment and Settlement Systems in India” released last week.
The apparent softening in RBI’s stand on cryptocurrency came after the Supreme Court last year set aside a circular issued by the RBI that barred any entity from providing banking services to anyone dealing with virtual or cryptocurrencies.
The RBI in its booklet on payment systems noted that central banks around the world are examining whether they could leverage on technology and issue fiat money in digital form.
According to Kumar Gaurav, Founder and CEO, Cashaa, it is too early to comment on what exactly the term ‘private cryptocurrency’ refers to as per the new government draft.
“Further, understanding that cryptocurrency is a global and decentralised system, there is no way any government can ban it. That would require that kind of technology and control, which technically does not rest with anyone,” Gaurav said.
“We are positive that the government will come up with regulations and policies that will put control on the scams and let the innovation in the industry, including the crypto like bitcoin, Cashaa, ethereum that are built on the public chain to grow and thrive,” he added.
Rahul Pagidipati, CEO at ZebPay said that the digital currency Bill to be introduced before the Lok Sabha is a welcome step forward.
“Its success will depend on the details, particularly the definition of what the Bill calls ‘private cryptocurrencies’. This is not a common term. Bitcoin is not privately owned by anyone. It is a public good, like the internet,” Pagidipati said.
Bitcoin and most crypto assets are more like gold and not an alternative to government-issued legal tender.
“Crypto assets and digital government currency can coexist and together, they can bring tremendous benefits to the Indian economy,” he noted.
With the overall value of all cryptocurrencies surpassing the $1 trillion mark and Bitcoin hovering over $33,000, industry experts have said that crypto may become the most important asset class of the 21st century and India needs to catch up fast with the global trend.
Use of blockchain technology in advancing digital economy
Minister of State for Finance Anurag Singh Thakur said it was announced in the Budget Speech of 2018-19 that the government does not consider crypto-currencies legal tender or coins and will take all measures to eliminate the use of these crypto-assets in financing illegitimate activities or as part of the payment system.
“The government will explore the use of the blockchain technology proactively for ushering in the digital economy,” Thakur said in a written reply to a question on introduction of India’s own crypto-currency.
Digital payments transactions have been steadily increasing since last few years post demonetisation.
The total transaction volume increased from 2,071 crore in FY2017-18 to 3,134 crore in FY2018-19, which corresponds to a growth rate of 51%, Thakur informed.
During 2019-20, the number of card payment transactions carried out through credit cards and debit cards increased by 23.5% and 16.1%, respectively, while the value increased by 21.1% and 35.6% to Rs 7.3 lakh crore and Rs 8 lakh crore, respectively.
Prepaid Payment Instruments (PPIs) recorded a volume growth of 15.7% on top of the 33.2% a year ago, while transactions value at Rs 2.2 lakh crore increased by little more than 1%.
Source: India, The Economic Times