India’s upcoming cryptocurrency legislation could place a ban on all private cryptocurrencies in the country, with certain exceptions, according to a notification by the Lok Sabha late on Tuesday evening.
The government is expected to table the ‘Cryptocurrency and Regulation of Official Digital Currency Bill, 2021’ in the coming Winter Session of Parliament through which it will seek to create a framework for the creation of India’s official digital currency, to be issued by the Reserve Bank of India (RBI).
While the government said it will “prohibit all private cryptocurrencies” via the legislation, the bill will allow for certain exceptions to “promote the underlying technology of cryptocurrency and its uses”.
It is not clear whether these exceptions will apply to certain cryptocurrencies, or only on the underlying technology of the virtual currency, which runs on blockchain.
The long-pending bill has been listed for introduction, consideration and passing in Parliament.
RBI has been a strong proponent of an official digital currency, called the Central Bank Digital Currency (CBDC), which is largely stable since it is backed by sovereign reserves. It has not had a favourable outlook towards cryptocurrencies, however, at one stage even banning their use altogether.
In July, T Rabi Sankar, Deputy Governor of the central bank had said that it was working on a “phased implementation strategy” of the CBDC to assess its use in wholesale and retail segments.
It is worth remembering that last year, the Supreme Court of India had struck down the RBI’s banking ban against cryptocurrencies. While placing a ban on the virtual currency, the central bank had raised concerns of consumer protection, market integrity and money laundering.
During a meeting between industry executives and a Parliamentary panel earlier this month, the larger consensus was that cryptocurrencies need some sort of a regulation.
Prime Minister Narendra Modi had also reportedly chaired a high level meeting on the usage of the virtual currency earlier this month, where it was felt that unregulated crypto markets cannot be allowed to become avenues for money laundering and terror financing.