Last week, news broke of a proposal by the Indian parliament to ban what they termed as “private” cryptocurrencies. Now, crypto has always been on the sights of several governments around the world but not a lot has been done to threaten the sector in most jurisdictions. India is, on the other hand, a little different hence the attention.
As it stands, the country’s ruling party has control over both houses of Parliament which implies that there is a huge possibility that the proposed bill could become law. Known as the Cryptocurrency and Regulation of Official Digital Currency Bill 2021, the new proposal seeks to outlaw the use of crypto in India.
However, this does not mean that India will be completely cutting ties with crypto. Instead of the so-called “private” cryptocurrencies, the Indian government will be shifting its focus to providing a framework for creating an official digital currency. This will be overseen by the Reserve Bank of India (RBI) which will not only distribute the currency but also regulate it.
The Industry Reacts
This is not the first time that India has made controversial proposals with regards to the crypto sector and, as expected, the move has generated some buzz. Both local and international crypto investors have already weighed in on the issue.
To begin with, many members of the crypto industry have been very open to the idea of the government developing a central bank digital currency (CBDC). This not only affirms the strength of crypto as a worthy replacement of fiat currency.
However, crypto stakeholders are not too happy about the plans by the country’s parliament to term certain digital currencies as “private”. In essence, any cryptocurrency that is not sovereign, including bitcoin, may be prohibited.
It is worth noting that, as it stands, there is no certainty about which specific digital currencies will be affected. This is because the government is also considering some unspecified exceptions in a bid to promote the underlying blockchain technology.
“The digital currency bill to be introduced in the Lok Sabha is a welcome step. 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,” said Rahul Pagdipati, CEO of ZebPay.
A consensus among industry stakeholders is that these crypto-assets and the government’s digital currency are more than capable of coexisting. Hopefully, more consultations will be conducted to ensure that the new laws can adopt a more forward-looking approach.