India Looks to Ban Private Cryptocurrencies

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In Brief
  • India's legislative budget session is to discuss the banning of private cryptocurrencies.

  • The RBI will also be looking at introducing its own CBDC.

  • India continues to push blockchain adoption while being cautious towards cryptocurrencies.

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The Reserve Bank of India will propose to ban private cryptocurrencies in its latest budget session. RBI also called for establishing a native digital currency. 

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The lower house of the parliament in New Dehli intends examine the future of finance in India. According to the Lok Sabha Bulletin, cryptocurrencies are on the schedule. 

The government plans to cover a multitude of topics. However, the most important one is The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021. 

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Two Foci at the Budget Session

The discussion of the bill will include two key topics. The first one will be the creation of an official digital currency. The Reserve Bank of India will issue the digital currency.

The second is that the bill will also call for prohibiting all private cryptocurrencies in India. The bill goes on to mention that certain exemptions will be considered in order to promote the underlying technology of cryptocurrencies and its users. 

The move from India comes following plenty of discussions about which direction the country would like to take regarding digital assets. 

India has previously stated that it was considering banning cryptocurrency trading, while continuing to embrace blockchain innovation.

The government has been very busy in discussions surrounding digital assets lately. Most recently, it stated that it was studying an 18% goods and services tax on bitcoin transactions. The proposed tax was envisioned to bring in a possible $1 billion in tax revenue. 

Digital Rupee to Follow the Digital Yuan?

While India continues debating what coins to ban, the RBI seems to be looking at moving forward with a digital Rupee. The bank is looking at following in the footsteps of China. India’s neighbor launched its Central Bank Digital Currency (CBDC) in 2020. The Digital Yuan is one of the first government launched digital currencies in the World. The Chinese government also looks set to continue expanding the Digital Yuan throughout the country for use on a broad scale by 2022.

India’s looking to introduce its own CBDC is not surprising. PayPal CEO Dan Schulman previously commented on CBDC adoption. He believes that the Covid-19 pandemic fast-tracked blockchain and digital asset adoption with countries across the globe. Schulman also stated that CBDC adoption is a matter of ‘when’ not ‘if’. 

India is not currently leading any races for crypto adoption. However, the country clearly sees what possibilities blockchain technology can offer. For example, India has previously explored a blockchain-powered remote voting system.

It’s clear the country is not confident in what cryptocurrencies can do for it. However, the government has no doubt about what blockchain technology can do to improve old technology and governance. 

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Ryan is a Fintech specialist with a passion for cryptocurrencies and blockchain adoption. A keen trader and investor in the market since 2016, he enjoys keeping up to date with the latest developments within the industry while finding the next 100x altcoin.

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