The Indian government is proposing a plan to ban all private cryptocurrencies in the country. The authorities are also planning to introduce a central bank digital currency (CBDC).
New draft legislation
New draft legislation from the government of India proposes a ban on all private digital currencies. The bill also seeks to create a framework for a central bank digital currency (CBDC). The proposal is pending approval from parliament and is up for discussion.
Dubbed the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, the proposal suggests a blanket ban on all types of private cryptocurrency. Barun Mitra, the founder, and director of an Indian policy think tank Liberty Institute said that the ban is not surprising. He said that the government has its eyes set on the private gold held by citizens for a very long time.
“If Indians have access to successful private currencies, they may take to it like ducks to water, leaving the government’s fiat money high and dry,” he said.
Is the government taking the wrong steps?
Mitra suggests that the government could have decided to compete with private cryptocurrencies while improving its monetary and fiscal policies. Instead, it has decided to outlaw other coins to retain a financial stronghold on its citizens.
The government’s documents suggest that the draft bill will create a framework for the launch of an official cryptocurrency by the Reserve Bank of India. It may keep some exceptions in its blanket ban to promote the underlying technology. Indian blockchain education company The Blockchain School founder Saurabh Sharma said that the bill is more optimistic. It aims to regulate cryptocurrencies instead of banning them altogether.
India has been considering a crypto ban for quite some time and refuses to acknowledge cryptocurrencies as legal tender. In April 2018, the Reserve Bank of India announced a blanket ban on banking to crypto entities which were later challenged in court. The Supreme Court overturned the decision but the legal and regulatory status of crypto coins is still unclear.
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