The India Government has a plan to ban all cryptocurrencies including Bitcoin and provide a framework for the creation of an official digital currency under the Reserve Bank of India (RBI). Titled ‘Cryptocurrency and Regulation of the Official Digital Currency Bill, 2021,’ the bill will be considered at the current Parliament Budget Session. The RBI is already exploring the possibility of issuing a digital version of the cryptocurrency that could eventually become the digital currency of the country’s central bank (CBDC)—based on the technological background of the cryptocurrency.
In 2018, the Indian government panel suggested a ban on all isolated cryptocurrencies and planned a prison term of up to 10 years for lawbreakers. The panel also suggested to Government of India to explore a digital version of the fiat coinage and ways to implement it.
While the proposal is anti-private cryptocurrencies, it will allow certain exclusions to support the underlying cryptocurrency technology, called Blockchain technology, and its uses, the bulletin said.
If the bill is approved, India would become the only foremost Asian economy to ban private cryptocurrencies rather than regulate them like company stocks.
At the time, RBI said a move was required to curb the “ring-fencing” of the country’s economic system. It also claimed that it is not necessary to consider Bitcoin and other cryptocurrencies as currencies since they are not made of metal or exist in physical form, nor were they stamped by the government. The 2018 notice from the central bank sent a fear to several home-grown startups and companies offering cryptocurrency exchange services. Almost all of them have either been closed down or rotated to serve other markets.
This proposal was challenged by a number of traders and exchanges who filed a lawsuit with the Supreme Court. Last year, the apex court of the nation ruled in their favor. This ruling was seen as “historical” but did not have an impact on the political level of the previous circular.