New Bill To Outlaw Private Cryptocurrencies Will Be Introduced In Parliament's Winter Session

One of the 26 bills to be introduced in the forthcoming winter session of Parliament is a law to restrict all private cryptocurrencies in India, with specific exceptions to promote the underlying technology and its purposes. Parliament's winter session will begin on 29 November.

It's called 'The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021', and it's one of a slew of new bills set to be introduced, debated and passed.

Following the news, on 24 November morning, all major cryptocurrencies saw a fall of around 15 per cent or more—Bitcoin dropped over 17 per cent, Ethereum has lost over 15 per cent of its value and Tether went down about 18 per cent.

However, the bulletin listing the legislative business posted on Lok Sabha's website noted: "To 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," the bulletin further stated.

However, the bulletin has not yet revealed any other details regarding the cryptocurrency bill.

Recently, P Vasudevan, Chief General Manager at the Department of Payment and Settlement of the RBI, said that the central bank's digital currency might see a test launch in the first quarter of the next fiscal year.

A high-level meeting convened by Prime Minister Narendra Modi earlier this month conducted a comprehensive examination of cryptocurrencies and the way forward.

Following this meeting, Parliament's standing committee on finance convened to hear from several industry stakeholders. The committee, chaired by Lok Sabha member Jayant Sinha, met with officials from crypto exchanges, the Blockchain and Crypto Assets Council (BACC), industry organisations, and other stakeholders to explore concerns about cryptocurrency regulation and promotion in India.

The conclusion of the first parliamentary panel reviewing the broad contours of Crypto Finance was that cryptocurrency cannot be halted, but it must be regulated.

PM Modi also urged cooperation across world democracies to ensure that cryptocurrencies like Bitcoin do not "end up in the wrong hands" while speaking at an event last week.

While the government and RBI have been debating the issue for months, there has been a surge in interest in cryptocurrency, with various individuals, investing in private digital currencies. India is thought to have the world's greatest number of cryptocurrency investors, albeit the amount invested may be less than in Western countries.

However, the RBI has been adamant about the necessity to outlaw private digital money and governor Shaktikanta Das, on many occasions, voiced his concerns regarding such virtual currencies.

While stating that blockchain technology should be promoted, the central bank questioned the need for cryptocurrencies to be classified as currencies. It stated that a currency is a sovereign property that cannot be given to a single organisation. Apart from the impact on the economy, there are concerns about price volatility.

In 2019, the government formed an inter-ministerial panel. Since then, there have been heated debates on the matter, with the industry lobbying hard to avoid a comprehensive ban.