By
Godfrey Benjamin
April 26th, 2024
The Indian government is reportedly considering a law to ban the use of private cryptocurrencies like Bitcoin. However, the government still seems keen on the use of crypto technology.
The government of India is reportedly mulling an option to ban the use of private cryptos in the country. In the legislative agenda released by the government, it is also working on developing the framework for its central bank digital currency (CBDC) aka Digital Rupee.
India’s own CBDC will operate under the guidance of its central bank – Reserve Bank of India (RBI). The proposed legislation shall be up for debate during India’s Budget Session on Monday, February 1. The agent notes:
The legislation seeks “to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses”.
This is not the first time that India is considering a ban on cryptocurrencies. In mid-2019, the government panel of India recommended banning all private cryptos. The panel also discussed imposing a 10-year jail and heavy fines for anyone dealing in digital currencies. The then Indian Prime Minister Arun Jaitley said:
“The government does not recognize cryptocurrency as legal tender or coin and will take all measures to eliminate the use of these crypto-assets in financing illegitimate activities or as part of the payment system.”
In 2018, the Reserve Bank of India (RBI) has asked all nationalized banks to cut their ties to crypto exchanges. However, this ban has been lifted by India’s highest judicial court, the Supreme Court of India, in March 2020.
India: Journey with CBDC and Cryptos
Looking at how major economies worldwide have started working on their CBDC plans, India is likely to follow suit. However, things don’t seem to accelerate anytime soon and it is likely to take time to roll out the digital version of INR. The discussions are at very preliminary levels as of now and we can say that they haven’t even kickstarted.
India is a major economic force being the fifth largest economy in the world with a $2.9 trillion GDP. Also, India’s growth trajectory is on track post-pandemic with IMF predicting over 11% growth this year.
Nischal Shetty, the CEO of India’s popular crypto exchange WazirX is optimistic that the government will not simply ban crypto. Currently, 7 million Indian investors hold over $1 billion in crypto assets in all. In an article published with local publication Inc42, Shetty writes:
“Cryptocurrency is a sunrise sector employing thousands of people in India. There are also tens of thousands of influencers in crypto from India. I believe that the government’s concern here is around the usage of crypto as a “currency” or as a payment mechanism. As an industry, we’re in sync with the fact that INR is the only legal tender in India. Also, crypto being an asset/utility which people buy and sell.”
“But the thing that is unclear and something that we believe will be in the right direction – is that crypto as an asset and its trading will be allowed in India,” the article reads further.
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