INDIA TO BAN ALMOST ALL PRIVATE CRYPTOCURRENCIES INCLUDING BITCOIN

Wed 24 November 2021:

After the government announced on Tuesday that it would introduce a new financial regulation bill, India is on track to ban all but a few private cryptocurrencies.

The ‘Cryptocurrency and Regulation of Official Digital Currency’ bill will establish a framework for the Reserve Bank of India to issue an official digital currency and will outlaw all private cryptocurrencies such as Bitcoin and Ethereum.

In his first public comments on the subject, Prime Minister Narendra Modi said earlier this month that all democratic nations must work together to ensure cryptocurrency “does not end up in wrong hands, which can spoil our youth.”

According to the parliament bulletin, the law, which is expected to be presented to parliament during the next session, will allow exceptions to promote the underlying blockchain technology, the bulletin did not provide further details.

A pre-verification approach like this would make it difficult for thousands of peer-to-peer currencies that thrive on operating outside the scope of regulatory scrutiny.

The government considered criminalizing the possession, issuance, mining, trading, and transference of crypto-assets earlier this year.

Money laundering and terror financing?

Sources said separately on Saturday that Modi recently presided over a meeting to discuss the future of cryptocurrencies, amid concerns that unregulated crypto markets could become conduits for money laundering and terror financing.

Two sources told Reuters, that the government is considering classifying cryptocurrency as an asset class rather than a currency, as demanded by crypto exchanges.

However, a senior government official told Reuters that the plan is to eventually ban private cryptoassets while paving the way for a new Central Bank Digital Currency (CBDC).

The Reserve Bank of India, which has expressed “serious concerns” about private cryptocurrency, plans to launch its CBDC by December.

Bitcoin, the world’s largest cryptocurrency, is currently trading around $60,000 (€53,000) and has more than doubled in value since the beginning of this year, attracting a flood of local investors.

There is no official data, but industry estimates indicate that there are 15-20 million crypto investors in India, with total crypto holdings of around 400 billion rupees (€4.77 billion).

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