The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 seeks to ban all private cryptocurrencies while allowing certain use cases
India's Crypto Economy
India's Crypto Economy is a brand-new weekly newsletter (delivered every Thursday) from Inc42 to help you decode the rapidly growing crypto economy and its implications on business, work and life. We launched this newsletter on the 4th anniversary of our weekly series “Crypto This Week” which completed 190 editions in May, 2021.
Dear reader,
The Lok Sabha recently published a list of 26 Bills that the Indian government intends to pass during the Winter Session of Parliament beginning November 29. ?
Unsurprisingly, the list includes the long-awaited Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, and describes it as a proposal to ban all private cryptocurrencies with a few ‘exceptions’.
But before we get into the details to assess how things are shaping up, let us take a quick look at the key highlights of the week from the world of crypto.
- ⚠️ Crypto Scams Mushrooming On WhatsApp: In the past four months, hundreds of crypto groups have been created to scam people by promising 100% returns every day. Most of these groups have the same modus operandi to lure unsuspecting users. In the first part of the series, Inc42 delves into the origin of these crypto frauds.
- ? Anand Mahindra And Crypto: Did Anand Mahindra ask everyone to hop on the crypto bandwagon? Has he really invested a lump sum into these digital assets? Fact-check here to stay updated.
Crypto In India: A Chaotic Journey, At Best ?
The Big Zero: On January 29, 2021, the Indian government first listed the Crypto Bill to introduce it during the Budget Session of Parliament.
As published by the Lok Sabha Bulletin, the Bill would “create a facilitative framework for 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.”
However, it was not introduced in Parliament as intended, and the entire crypto community breathed a great sigh of relief ??. Since then, finance minister Nirmala Sitharaman and many other government officials have mentioned that certain changes are likely to take place and a Cabinet Note is being prepared for the same. Such statements indicated, for all intents and purposes, that there would not be an outright ban.
On November 23, the government listed the Crypto Bill yet again. But its description remains totally unchanged, and it still iterates the prohibition of all private cryptocurrencies with few ‘exceptions’ and ‘uses’.
The Big Crash ?: Crypto investments in India have officially crossed INR 6 Lakh Cr, and a possible blanket ban in India à la China has already disrupted the market. With #Cryptoban trending on Twitter India and other social platforms, there has been a growing sense of unease among the investors.
Binance backed crypto exchange WazirX crashed after the news broke. The platform witnessed 400% traffic than usual. ?
Cryptocurrency markets also saw dips in token value following news reports on a possible ban. Bitcoin registered an immediate dip of $1,500, from $57.6K to $56.2K, but other cryptos did not suffer a stiff fall.
On local exchanges, however, the story was entirely different. Most of the crypto did witness a stiff fall. According to reports, shiba inu and dogecoin sunk more than 20% on WazirX.
The Big Hope ?: Although the Bill description sounds as ominous as before, will there be no change in the government’s stand regarding crypto? Maybe some details have changed inside the document, the industry hopes.
Ashish Singhal, founder and CEO of the crypto exchange and brokerage platform CoinSwitch Kuber and co-chair of the IAMAI’s Blockchain and Crypto Assets Council, also thinks nobody will be left in the lurch.
“Our discussions (with the government) in the past few weeks indicate a broad agreement on ensuring that customers are protected, the stability of the (crypto) financial system is reinforced and India is able to take advantage of the crypto technology revolution,” he said.
According to him, the industry still hopes that the government will involve all stakeholders while drafting the Bill. ?
“At CoinSwitch Kuber, we shall follow the directions provided by the government. As of now, I urge all crypto asset investors in the country to remain calm and do their research before rushing to a conclusion. Investors should wait for a government statement on this matter and must not rely on secondary sources of information,” he said.
As India is home to more than 15 Mn crypto owners, the highest number globally, the onus lies on the government to protect the interest of crypto investors in the country, says Jay Hao, CEO of the global cryptocurrency exchange OKEx.
For Binge Reading
? A Wallet-Based Approach For Crypto Regulation In India: Crypto think tank Policy 4.0 has come up with a wallet-based approach for smooth regulatory management of crypto in India. In this case, the Indian wallet can act as a one-stop tool for ring-fencing risks and managing domestic and crossborder cryptocurrency activities by Indians. Read the white paper here.
? Cryptographers Allege Misuse Of The Word ‘Crypto’: In the past, the word ‘crypto’ was defined as the computerised encoding and decoding of information. But if we google it, crypto refers to cryptocurrencies like bitcoin and ether. And cryptographers are not at all happy with this change of perception. But why?
Tweet Of The Week ?
Remember crypto whizz-kid Justin Sun’s $4.5 Mn dinner with veteran investor Warren Buffett? Sun wanted to change Buffett’s opinion regarding crypto. Interestingly, in the world of investment, young investors often spend too much time to impress old investors, but crypto investor Anthony ‘Pomp’ Pompliano advises them to focus on what they do best, and ‘older investors will find them’.
News Doing The Rounds ?
- ? BollyCoin Closes Presale Round: Mumbai-based NFT platform closed its presale round after enthusiasts bagged 20 Mn tokens worth $2 Mn. The platform plans to go live in December this year.
- ? OneRare Raises Seed Round: Delhi-based blockchain startup OneRare raised $2 Mn in seed funding from angel investors and investment funds. The company plans to create a metaverse around food and allow users to swap OneRare NFTs for meals and deals in real-world restaurants.
- ? US Regulators To Clarify Banks’ Role In Crypto: US regulators the Federal Reserve (Fed), the Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency released a joint statement regarding crypto, stating that a clarification would be issued in 2022 about the role banks may legally play across crypto markets.
- ? Will India Ban Crypto? It is perhaps the most-read and most-discussed news item throughout the world of crypto, and businesses and investors alike are pondering whether the country will ban crypto trading.
The Bill clearly bans crypto as a legal tender. And, that’s been the government’s stance since the beginning. However, the question is whether the government will allow crypto in any form?
If so, in what form? ?♂️
Read our latest article on the Crypto Bill to know more about it.
Till next week,
Suprita Anupam
