Narendra Modi-led government is set to move a bill in the Winter Session of Parliament, scheduled to start on November 29, that seeks to prohibit all private cryptocurrencies in India. It is among 26 other bills which are to be introduced.
The bill, if passed, would effectively ban citizens in India from transacting in most cryptocurrencies.
What does the Bill propose?
The Cryptocurrency and Regulation of Official Digital Currency Bill seeks to ban all but a few private cryptocurrencies to promote underlying technologies while allowing an official digital currency by RBI. It has been listed for introduction, consideration and passing in the Lok Sabha.
Also read: Centre plans to bring bill to ban private cryptocurrency, 25 other bills at Winter Session
The government's objective is "to create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India". The RBI had announced its intent to come out with an official digital currency in the face of the proliferation of cryptocurrencies like Bitcoin, about which the central bank has had many concerns.
Size of cryptocurrency market
There are an estimated 15 million to 20 million cryptocurrency investors in India, with total crypto holdings of around 400 billion rupees, according to industry estimates. There is no official data available on cryptocurrency holdings and the user base.
The bill has triggered heavy selling in the country's digital currency markets, as investors look to exit positions despite the losses, said traders and investors.
What is the govt's stand?
The Reserve Bank of India has reiterated its strong views against cryptocurrencies, saying they pose serious threats to the macroeconomic and financial stability of the country and also doubted the number of investors trading on them and their claimed market value.
Last week, the Standing Committee on Finance, chaired by BJP member Jayant Sinha, met the representatives of crypto exchanges, blockchain and Crypto Assets Council (BACC), among others, and arrived at a conclusion that cryptocurrencies should not be banned, but it should be regulated.
Currently, there is no regulation or any ban on the use of cryptocurrencies in the country. Earlier this year, the Supreme Court had set aside an RBI circular prohibiting banks and entities regulated by it from providing services in relation to virtual currencies.
Expressing concerns over cryptocurrency "ending up in the wrong hands", Prime Minister Narendra Modi had said, "Take cryptocurrency or Bitcoin for example. It is important that all nations work together on this and ensure it does not end up in the wrong hands, which can spoil our youth."
(With agency inputs)
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