Govt Plans Bill to Ban Private Cryptocurrencies, RBI Allows Digital Coin

Govt Plans Bill to Ban Private Cryptocurrencies

The government will introduce a bill to make rules for cryptocurrencies with the aim of prohibiting private coinage while providing a framework for the creation of an official digital currency to be issued by the Reserve Bank of India (RBI).

According to a bulletin issued by the Lok Sabha on Tuesday, the bill has been listed among 26 items of law for consideration in the winter session of Parliament. The crypto industry expects that there will not be a complete ban on cryptocurrencies.

“The bill also seeks to ban all private cryptocurrencies in India. However, it allows for certain exceptions to promote cryptocurrency and the underlying technology of its use,” the bulletin said in relation to the cryptocurrency and regulation of the Official Digital Currency Bill, 2021. It is “to create a facilitating framework for the creation of It also seeks "an official digital currency to be issued by the Reserve Bank of India."

ET reported earlier this month that India is looking at a middle path on cryptocurrencies as it finalizes legislation for the winter session.

The RBI has raised objections to private cryptocurrencies with Governor Shaktikanta Das calling them a threat to macroeconomic and financial stability.

Crypto platforms have argued that digital currencies need regulation and should not be banned.

“While the details of the draft bill appear to be the same as of January 2021, there have been several notable developments since January,” said WazirX founder Nischal Shetty. “First, the Parliamentary Standing Committee invited a public consultation, and then our Prime Minister himself came forward to call for crypto regulations in India.”

The government had earlier listed the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, for the budget session but deferred the move to wider consultations.

In July 2019, a high-level government panel proposed a complete ban on all types of private cryptocurrencies.

Earlier this month, Prime Minister Narendra Modi chaired a high-level meeting on cryptocurrencies with officials from the RBI, the finance ministry and the Securities and Exchange Board of India (SEBI).

The Parliamentary Standing Committee on Finance then met with representatives, stakeholders and experts from the crypto industry. Panel chairman Jayant Sinha told ET that the committee has not taken any opinion on cryptocurrencies and the industry has claimed that there are 15 million registered users and the total investment is Rs 600 crore.

Let's look once again at the growing popularity of cryptocurrencies as an investment.

“It is important that all democratic countries work on this (cryptocurrency) and ensure that it does not fall into the wrong hands, which can spoil our youth,” the PM said at the Sydney Dialogue last week.