The Government of India has dropped a huge hammer on crypto enthusiasts in the country as it has decided to officially pass a bill to ban all private cryptocurrencies in the winter session of Lok Sabha (Parliament), which is scheduled to begin on the 29th of November.
Soon after the announcement of the proposed bill, all hell broke loose as crypto holders in the country began disposing of their holdings in the digital currency and the massive amounts of panic selling lead to WazirX, India’s biggest cryptocurrency exchange crashing.
Since cryptocurrencies are volatile, unregulated, and carry cyber-security risks like loss or destruction of the private key, the Indian government has been continuously warning citizens from investing in cryptocurrencies.
In addition, the International Monetary Fund had stated that since crypto-assets have the potential to disrupt different aspects of the global financial system, they should be monitored closely.
The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 will be introduced in the Lok Sabha later this month. If the bill is passed, it may only ban private cryptocurrencies such as Monero, Dash, Zcash and so on.
The government has not clearly mentioned the definition of private cryptocurrency yet. Hence, it is unclear whether it will allow people to trade Bitcoin, Ether, and so on which are public block-chain based cryptocurrencies.
As per a bulletin issued by the Lok Sabha, it will allow certain exceptions to promote the underlying technology of cryptocurrency and its uses. It further said that it seeks “to create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India.”
The RBI fears that it may create economic balance as it can impact inflation and forex. A blanket ban is expected to stop crypto exchanges and other risks associated with them.
Meanwhile, supporters of the unregulated exchanges are lobbying against its outright ban by campaigning for inclusion in a regulatory system
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