Centre Pushes Bill To Impose A Blanket Ban On Cryptocurrencies

The “Cryptocurrency and Regulation of Official Digital Currency Bill, 2021” is expected to be introduced by the government. “The bill will be considered and passed during the winter session of Parliament, which begins on November 29. The bill’s goal is to “provide a conducive environment for the formation of the Reserve Bank of India’s official digital currency.” The measure also aims to outlaw all private cryptocurrencies in India, with few exceptions to encourage cryptocurrency’s fundamental technology and applications “, according to a notice on the Lok Sabha’s webpage.

The government’s legislative agenda for the forthcoming winter session of Parliament revealed that it aims to outlaw “private cryptocurrencies.” The decision comes days after Reserve Bank of India governor Shaktikanta Das cautioned that crypto-currencies constitute a severe threat to macroeconomic and financial equilibrium.

The government has yet to clarify the meaning of private crypto-currencies. According to certain definitions, Bitcoin, Ethereum, and a slew of other cryptocurrencies are built on public blockchain networks, which means that transactions done on the networks may be traced while maintaining user privacy. Private cryptocurrencies, on the other hand, might refer to Monero, Dash, and other cryptocurrencies that, although being constructed on public blockchains, disguise transaction information to provide users with privacy. In other words, whereas Bitcoin provides anonymity, Monero provides privacy and is hence a private token.

A blanket prohibition in India would compel crypto exchanges to close their doors. After China declared a blanket ban on cryptocurrency in September, one of the world’s top crypto exchanges, Huobi, had to do the same. The exchange’s creator told the Financial Times on November 8 that income from Chinese customers will be nil in the September to December period.

WazirX, India’s biggest crypto trading platform’s CEO, Nischal Shetty said “The crypto regulation bill has been listed for the winter session. The description hasn’t changed much. There will be speculation on both sides. The good thing is more people within the government are aware of how crypto works.”

However, as many industry officials and experts pointed out the last time such a ban was proposed, prohibiting cryptocurrencies may be technologically unfeasible. Although the government can prohibit the use of local money to purchase crypto, industry insiders say there’s nothing the government can do about crypto wallets, which exist online and aren’t regulated by any banks or governments. Peer-to-peer networks are especially difficult to monitor since users may easily move money to one another via bank accounts and crypto between each other via wallets.

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