The government wants to ban all private cryptocurrencies, with some exceptions, to pave the way for a central bank-controlled digital currency. But this may not be as drastic as it seems.
The details of the planned legislation are still unclear, leaving crypto investors hoping they will still be able to trade in what has become a booming one in India.
How Big is Cryptocurrency in India?
The market has boomed since the Supreme Court overturned the previous ban last year, exploding more than 600% in the past 12 months according to Chainalysis research.
Between 15 and 20 million people in Asia’s third-largest economy are estimated to own cryptocurrencies, according to industry body the Blockchain and Cryptocurrency Asset Council (BACC).
Indians have been bombarded with advertisements by Bollywood and cricket stars for spontaneous crypto exchanges like CoinSwitch Kuber and CoinDCX.
What did the government say?
Prime Minister Narendra Modi last week said cryptocurrencies can “damage our youth” and the central bank has repeatedly warned that they can raise “serious concerns about economic stability”. macro and financial”.
Media reports say that legislation is being worked on to impose some regulation on the sector – and also attempt to tax the industry – but will stop before an outright ban like the one imposed on the industry. China’s emerging giant.
What do we know about the new bill?
On Tuesday, a congressional bulletin listed the upcoming legislation including a paragraph on “Cryptocurrency and Regulation of the Official Digital Currency Bill, 2021”.
“To create a favorable framework for the creation of an official digital currency issued by the Reserve Bank of India,” it read. “The bill also seeks to ban all private cryptocurrencies in India, however, it does allow certain exceptions to promote the underlying technology of the cryptocurrency and its use.”
Any clues?
One of the main arguments made by proponents of Bitcoin and other cryptocurrencies is that, unlike fiat currencies, they are not controlled by the state.
But crypto investors are hoping that the government’s broad exceptions and definitions of the word “private” can provide some hedging.
Well-known crypto tokens like Bitcoin and Ethereum are based on public and non-private blockchain networks, making transactions easier to track while retaining some anonymity.
But others like Monero or Dash, while built on the public blockchain, obfuscate transaction details to allow users to maintain privacy. Maybe the Indian government can put these things in its sights.
Will the ban work?
Outlawing tokens is difficult because they are pieces of code with no inherent value. Transferring them from one virtual wallet to another is like sharing a computer file.
But on the other hand, the cryptocurrency exchanges that most investors use to buy and sell tokens may be subject to more scrutiny.
The government could also stipulate a minimum amount for investments in digital currencies, while banning their use as legal tender, Bloomberg News reported.
Ashish Singhal, co-chair of BACC and founder of exchange CoinSwitch Kuber, said: “Obviously the wording of[billing message]was unfortunate and so a bit of panic created the market. school.
“And that’s where I would like to urge all crypto asset investors in the country to stay calm,” he told AFP.
(Except for the title, this story has not been edited by NDTV staff and is published from an aggregated feed.)
