The Government of India Is Preparing a Cryptocurrency Banning Bill
Last updated June 28, 2021
- Holders of cryptocurrencies in India may soon be forced to trade them with “digital rupees.”
- There’s a bill coming for discussions on the upcoming budget session, setting the context for the move.
- India has been trying to apply regulatory pressure on anonymous cryptocurrencies since 2018.
The Government of India is preparing to make a move that wasn’t expected in the country, as a new bill listing has appeared in the portfolio of the discussions about the budget session of the 17th Lok Sabha that commenced today, which is essentially looking to ban all private cryptocurrencies in the country. That would include Bitcoin, Ether, Monero, DASH, Verge, ZEN, and practically everything people have been investing in a frenzy lately.
At the same time, an RBI (Reserve Bank of India) booklet issued on January 25, 2021, mentions a digital version of the rupee, India’s official currency. If that sounds a lot like China’s approach with the “digital yuan,” it’s because, in essence, it is the same thing. India is looking to apply regulatory pressure on anonymous cryptos that aren’t controlled directly by it and instead push its own official digital token.
The regulators in India have been historically skeptical about cryptocurrencies and never really welcomed them. Intrinsically, cryptos introduce a host of practical problems for governments, many of which are documented in this excellent article by Sydney Butler. There has been some action against cryptos in India since 2018, when the RBI banned bank channels from payments associated with cryptocurrency, but the Supreme Court overturned this in March 2020. In 2019, the government introduced a bill that wanted to criminalize the possession of cryptos in India, but that never reached the Parliament.
It is estimated that Indians hold over a billion USD worth of crypto, spread across 7 million accounts. This wealth won’t be “erased” if the bill is passed, but the holders will most likely be offered incentives to exchange it with digital rupees.
Whether or not this can be taken to the Supreme Court again, we will have to wait and see. It is possible that many of the crypto-holders will object to the mandatory trade, as this means giving up on the amazing value rise potential of the current form of their assets.
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