Indian authorities plan to propose a new law to ban private cryptocurrencies and implement a framework for an official central bank digital currency.
In 2019, the draft bill was going by the name of “Banning of Cryptocurrency and regulation of official digital currency”. It’s interesting to notice that this time around, there’s no mention of a ban in the bill name. The first part says that there will be a regulation to help RBI create its own CBDC. This is a good thing that the government has shown intent for a CBDC (central bank digital currency) and wants to initiate laws to make it easy for RBI to create its own CBDC. In fact, we believe that the RBI must get a digital version of INR in sync with how China, the US etc. are trying for their own currencies.
This year, India will seek “to prohibit all private cryptocurrencies in India”, according to a legislative agenda published by the lower house’s website on Friday last wee, with exceptions for certain purposes such as the promotion of the underlying technology and its uses.
In addition, lawmakers will look to “create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India (RBI)”.
RBI Launching its own digital currency
Not unlike other central banks, the RBI has been accelerating efforts to launch its own electronic money and tighten regulation against cryptocurrencies. It first issued an order in April 2018 to cut ties with all individuals or businesses dealing in digital currencies like Bitcoins within three months.
But India’s Supreme Court subsequently overturned the ban by allowing banks to handle crypto transactions from exchanges and traders.
The pushback reflects broader shifts in sentiments worldwide, particularly amongst banks which have been demonstrating increasing openness to cryptocurrencies.
There are agendas and then there are actions. Governments around the world claim they want to support innovative and cutting edge technologies such as AI, ML, Blockchain etc. However, in order to really make a positive difference and go ahead in these technologies, deep expertise is needed. Unfortunately, India hasn’t yet been able to create deep crypto expertise. The lack of regulatory clarity and the hostile nature towards this innovation is to blame for this situation.
As of now, this bill is included in the list of bills to be presented in this Parliament session. If it’s presented, then it will be referred to a standing committee so that they hold discussions with the crypto industry of India before moving ahead with regulations for this sector. After all, this is a really important bill that involves both finance and technology.
Overall, this is a great move forward as it gets India closer to regulations.
The right crypto regulation will catapult India ahead in this innovative technology while wrong regulation such as a ban on Crypto will set the country back by 10 years. It remains to be seen whether or not the Indian government will be able to catch up with the rest of the world, or end up losing a golden opportunity in this prospective sector.