India legislature to introduce bill banning private cryptocurrencies
India legislature to introduce bill banning private cryptocurrencies

According to the Indian Parliament’s legislative agenda announced on Tuesday, the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, will be introduced during Winter Session beginning on November 29. The bill was originally supposed to be introduced during the budget session in February 2021 but was tabled.

The bill seeks to prohibit all private cryptocurrencies in India, according to the list of businesses. It does, however, allow for certain exceptions to promote the underlying technology of cryptocurrencies and their usage. The law attempts to create a framework that will make it easier for the Reserve Bank of India (RBI) to develop an official digital currency. Further, RBI may launch its first digital currency trial programs by December, as reported by CNBC.

Recently, while speaking at the Sydney Dialogue, a forum on emerging, critical, and cyber technologies, Prime Minister Narendra Modi urged all countries to work together to ensure that cryptocurrency is not misused.

This comes shortly after the first-ever meeting of the Parliamentary Standing Committee on Finance discussion on the broad contours of crypto finance, during which the committee agreed that cryptocurrencies cannot be banned, but they must be regulated. The panel met just days after Prime Minister Narendra Modi convened a high-level conference on cryptocurrency with officials from various ministries including RBI. As reported by ANI, the government is concerned with and wants to prevent attempts to mislead youth by over-promising and non-transparent advertising regarding cryptocurrencies. The committee also discussed unregulated cryptocurrency markets and how the government must prevent them from becoming conduits for money laundering and terror financing.

Last March, the Supreme Court quashed an RBI notification prohibiting regulated entities from dealing in virtual currencies (VCs). It was opined that the curbs were excessive. The court noted:

When the consistent stand of RBI is that they have not banned VCs and when the Government of India is unable to take a call despite several committees coming up with several proposals including two draft bills, both of which advocated exactly opposite positions, it is not possible for us to hold that the impugned measure is proportionate.

Even since the RBI ban was lifted in March 2020, there has been an exponential increase in interest in cryptocurrencies, with Indian exchanges reporting significant user additions and a sustained surge in daily trading volumes.  According to BrokerChoose’s annual crypto proliferation index, India ranked fifth in cryptocurrency owners at 7.30 percent of the total population.