- The Indian government's draft legislation proposes to “ban all private cryptocurrencies."
- The same bill also mentions the government's central bank digital currency (CBDC) plan.
- The bill is pending Parliament's approval by April 8.
Editor’s note: This article has been updated to include comments from Barun Mitra and Saurabh Sharma.
The Indian government is considering a plan to “ban all private cryptocurrencies” and to create a framework for a central bank digital currency (CBDC). The proposal is pending Parliament's approval by April 8 and will be debated until then.
The legislative proposal, the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, suggests a blanket ban on all ‘private cryptocurrency,' which likely means coins such as Bitcoin and Ethereum. At the same time, the bill, filed yesterday, proposes the introduction of its own central bank digital currency (CBDC), joining a growing list of countries exploring CBDCs.
A divisive proposal
Barun Mitra, the founder of the Liberty Institute, an Indian policy think tank, told Decrypt that he is not surprised by the ban, since the government has also been eyeing the private gold owned by ordinary Indians for a long time.
“If Indians have access to successful private currencies, they may take to it like ducks to water, leaving the government's fiat money high and dry,” he said.
“The government could have chosen to use the competition from private cryptos to improve its own fiscal and monetary policies and win the trust of the people. Instead, the government seems to be choosing to outlaw the potential competitors in currency, and retain their financial stranglehold over the citizens.”
According to government documents, the draft 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."
Saurabh Sharma, founder of the Indian blockchain education company The Blockchain School, told Decrypt not to panic, since the bill is yet to be implemented. He added, “this time the bill looks a bit optimistic as they have emphasized more on regulating and not banning them entirely.”
India's back and forth on crypto bans
India previously considered a crypto ban a few years ago. In April 2018, the Reserve Bank of India barred banks from dealing with crypto companies. But that ban did not last long: As reported by Decrypt, India’s Supreme Court overturned that decision in March 2020.
However, this month's draft may not as harsh as the one formulated last June, when a government panel proposed a 10-year prison for crypto traders. The draft legislation makes no mention of a jail sentence.
And perhaps there’s some hope in the cryptic language of the draft bill. It asks for “certain exceptions” to the ban in order to promote the technology.
But could that exception just be... its CBDC? Tune in to the debates to find out!