Govt likely to ban all private cryptocurrencies in new bill: 10 points you should know before ban

Following the winter session of Parliament, the Indian government might introduce a bill to prohibit all private cryptocurrencies in India however allowing “certain exceptions to promote the underlying technology of cryptocurrency and its uses.”

Notably, on March 4, 2021, the Supreme Court rejected the circular passed by the RBI on April 6, 2018, which prohibits banks and entities regulated by the regulatory body from providing services in relation to digital coins.

Here are 10 important points you should know on the cryptocurrency ban in India:

1. Titled ‘The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021,’ is listed to be introduced in the Lok Sabha in the upcoming winter session that is scheduled to begin from November 29.
2. The bill aims to “create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India.”
3. It also aims to ban all private cryptocurrencies in India, however, “it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.”
4. Currently, the country has no regulation or ban on the use of cryptocurrencies.
5. Earlier this month, Prime Minister Narendra Modi along with other senior officials conducted a meeting on cryptocurrency which discussed the issue that strong regulatory steps could be taken to deal with the issue.
6. Also, there have been discussions about how advertising which features several celebrities promising easy and high returns on investment in cryptocurrencies can be alleged used for luring investors with deceptive claims.
7. Meanwhile, last week the Standing Committee on Finance headed by BJP member Jayant Singh met the representatives of crypto exchanges platforms, blockchain, and Crypto Assets Council (BACC), among others and came to the decision that cryptocurrency trading should not be banned; however, it should be regulated.
8. On the other hand, the Reserve Bank of India has always opposed cryptocurrencies, stating that they cause serious threats to the macroeconomics and financial stability of the country and also raised a doubt on the investors trading them and their claimed market value.
9. RBI Governor Shaktikanta Das also presented his thoughts and views against allowing cryptocurrencies, as they pose a serious threat to any financial sector as they are unregulated by central banks. Besides, the RBI has shown its intent to introduce an official digital currency in the face of the proliferation of cryptocurrencies like Bitcoin, about which central banks have many concerns.
10. Cryptocurrencies or digital coins have gained popularity in the past decade or so. However, in India regulators and the government have been cynical about these virtual currencies and are apprehensive about the associated risks.