India’s Crypto Bill Seeks To Ban Cryptocurrencies, To Allow Certain Use Cases

The Indian government has yet again listed crypto bill named — “The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021″, for the upcoming winter session of the parliament. The bill seeks to ban all private cryptocurrencies while allowing a few exceptions. 

The Bill may have to seek the cabinet’s approval before it is tabled in the parliament. 

The Crypto Bill has been listed along with 25 other proposed bills including The Insolvency and Bankruptcy (Second Amendment) Bill, 2021, and The Banking Laws (Amendment) Bill, 2021 that seeks privatisation of two public sector banks.

According to the bill description, the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, seeks:

“To create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India. The Bill also seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.”

Commenting on the development, Nischal Shetty, founder and CEO of Binance-owned crypto exchange WazirX said that while the description of the draft bill appears to be the same as in January 2021, several noteworthy events have occurred since January. First, the Parliamentary Standing Committee invited a public consultation, and then our Prime Minister himself came forward to call for crypto regulations in India. “That being said, let’s respectfully wait to find out more about the draft bill to be tabled in the Parliament,” he said.

The bill will also pave the way for the central bank digital currency (CBDC) aka fiat cryptocurrency project. The RBI has already been working on the project. However, it is far behind in the global race of fiat cryptocurrencies. According to the CBDC tracker by The Atlantic Council, while seven countries such as Nigeria, The Bahamas etc have already launched their CBDCs, 16 countries including China have launched their CBDCs in pilot mode.

The RBI governor Shaktikanta Das had earlier told that India would start testing its CBDC in December, this year. Recent reports suggest that pilot might begin in Q1 2022. 

The latest Bill seems to be in line with the position taken by the RBI. The RBI has been issuing multiple warnings for the past many years. Recently, Shaktikanta Das had said that these [crypto] currencies pose serious threats to the macroeconomic and financial stability of the country. Das also undermined the number of investors trading on them as well their average transaction values.