Here Is How India Plans To Ban Private Cryptocurrencies And Promote Official Digital Currency
Cryptocurrencies have been a rage across the world for some time and Bitcoin, which has been the leader of the pack has been setting new value records.
But, even as these deregulated digital currencies are becoming more and more mainstream and gaining acceptance around the world, Indians are still out of luck.
Legal or not?
Cryptocurrencies have been in a sort of confusing spot in India for a long time. While it has not been authorized or regulated as a payment option there has been no ban on such transactions in India. And there have been several cases in India in which investors were made to believe that they are investing in digital currencies that promised high returns, but turned out to be a scam.?
But now things are set to change as the government is likely to bring a law in the Parliament to regulate such transactions.
The Cryptocurrency and Regulation of Official Digital Currency Bill is to be introduced in the Budget Session of the Parliament and it aims 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.
The Reserve Bank of India (RBI) is already exploring the possibility as to whether there is a need for a digital version of fiat currency and in case there is, then how to operationalise it.
RBI's digital currency
The RBI made the remarks in a booklet titled "Payment and Settlement Systems in India" released last week.
The apparent softening in RBI's stand on cryptocurrency came after the Supreme Court last year set aside a circular issued by the RBI that barred any entity from providing banking services to anyone dealing with virtual or cryptocurrencies.
The RBI in its booklet on payment systems noted that central banks around the world are examining whether they could leverage on technology and issue fiat money in digital form.
?China which introduced an official digital currency backed by its government and the central bank for some five years has since made considerable progress in making the digital yuan a digital sovereign currency.
As the government is set to regulate cryptocurrencies in India, those involved in the business said they hope the government will listen to them before the framework is made.?
"Since the government is considering introducing the Bill during this session of Parliament, we are sure the government will definitely listen to all the stakeholders before taking any decision," said Sumit Gupta, co-founder and chief executive of CoinDCX, a cryptocurrency exchange in India.
"We are talking to other stakeholders and will definitely initiate deeper dialogue with the government and showcase how we can actually create a healthy ecosystem in unison," he said in a statement.
According to Kumar Gaurav, Founder and CEO, Cashaa, it is too early to comment on what exactly the term 'private cryptocurrency' refers to as per the new government draft.
"Further, understanding that cryptocurrency is a global and decentralised system, there is no way any government can ban it. That would require that kind of technology and control, which technically does not rest with anyone," Gaurav said.
"We are positive that the government will come up with regulations and policies that will put control on the scams and let the innovation in the industry, including the crypto like bitcoin, Cashaa, ethereum that are built on the public chain to grow and thrive," he added.
Rahul Pagidipati, CEO at ZebPay said that the digital currency Bill to be introduced before the Lok Sabha is a welcome step forward.
"Its success will depend on the details, particularly the definition of what the Bill calls 'private cryptocurrencies'. This is not a common term. Bitcoin is not privately owned by anyone. It is a public good, like the internet," Pagidipati said.
