Adding to the uncertainties surrounding the future of cryptocurrencies in India, the country’s government has released a description of a forthcoming legislative proposal that would prohibit private crypto and would allow the Reserve Bank of India (RBI), the country’s central bank, to create its central bank digital currency (CBDC). Also, some crypto trading may be permitted.
The latest development comes at a time when India’s government and lawmakers are discussing new regulations for cryptocurrencies, with local observers expecting the described legislation to be passed during the parliament’s winter session which is to begin on November 29.
Prime Minister Narendra Modi’s government proposes to help the RBI create a CBDC, as reported by Bloomberg, citing the description of the bill.
It further states that,
“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 bill’s exact provisions, including its definition of what constitutes “private cryptocurrencies,” are unknown, adding to the speculation over the final stance that the Indian government will adapt with regards to cryptocurrencies.
Tanvi Ratna, CEO of Indian think tank Policy 4.0, commented to local broadcaster CNBC-TV18 that the intent of the government “is very clear” and that “private cryptocurrency by itself is very much any non-sovereign cryptocurrency.”
This said, when replying to a question whether bitcoin (BTC) and other cryptos developed with the use of the distributed ledger technology were to be treated as private cryptocurrencies, Ratna recognized “it’s not very clear yet” and that the bill’s updated draft that would cover this issue was not yet ready.
That’s not the end to the confusion as, per a different Bloomberg report, the country may allow crypto trading to some investors. It’s “considering a proposal to treat cryptocurrencies as a financial asset while safeguarding small investors,” it said, citing “people familiar with the matter.”
Meanwhile, the regulatory uncertainty seems to have impacted even the largest stablecoin by market value on Indian crypto exchanges. Tether (USDT) is meant to be worth USD 1, which is INR 74.38. However, the WazirX exchange shows USDT crashing to as low as INR 60. It has since recovered and is now trading at around INR 74.
The latest weeks have brought a number of signs that India’s government and parliament are not planning to ban bitcoin and similar cryptocurrencies.
During a meeting held on November 15, entitled ‘CryptoFinance: Opportunities and Challenges’, Indian MPs met with representatives of major exchanges, the Blockchain and Crypto Assets Council (BACC), and other industry insiders for the first time ever, and concluded that crypto cannot be stopped, but should be regulated.
Meanwhile, government sources that are involved in the legislative works have also vowed that “progressive” and “forward looking” steps would be made in the field of crypto regulation as the industry asked for the Indian authorities to treat cryptocurrencies as special class assets.