India has reportedly been set to ban all but a few private cryptocurrencies. What does it mean, and what could lie ahead?
Throughout the history of cryptocurrency, many countries have attempted to ban and limit access to coins and digital wallets. Some have had success for a small window of time, only to see it busted wide open when newer coins emerge and other countries join in. India has reportedly joined the list of people to go all out, as they are on track to ban all but a few private cryptocurrencies after the government announced on Tuesday it was introducing a new financial regulation bill. The back and forth affair with India and crypto continues.
A bill was recently presented, and sets to shake things up for many of big name coins in India. The ‘Cryptocurrency and Regulation of Official Digital Currency’ bill will create a facilitative framework for an official digital currency to be issued by the Reserve Bank of India, and that will look to ban all private cryptocurrencies, which includes Bitcoin and Ethereum.
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Prime Minister Narendra Modi said earlier this month that “all democratic nations must work together to ensure cryptocurrency does not end up in wrong hands, which can spoil our youth.” It was his first public comments spoken directly on the subject. The law, which will be presented to the parliament in the next session, will allow exceptions to promote the underlying blockchain technology, according to the parliament bulletin. The statement was provided without further details, leaving many with more questions than answers. A pre-verification approach would create obstacles for thousands of peer-to-peer currencies that thrive on being outside the scope of regulatory scrutiny. Modi recently chaired a meeting to discuss the future of cryptocurrencies, amid concerns that unregulated crypto markets could become avenues for money laundering and terror financing, according to reports in recently weeks.
The new rules are also likely to discourage marketing and advertising of cryptocurrencies in order to dull their allure for retail investors, according to an industry source who was part of a separate parliamentary panel discussion held on Monday.
The government could be looking to classify crypto as an asset class, as demanded by the crypto exchanges, rather than as a currency. A senior government official told Reuters that the plan is to ban private crypto-assets, ultimately while paving the way for a new Central Bank Digital Currency (CBDC).
The Reserve Bank of India, which has voiced “serious concerns” about private crypto, is set to launch its CBDC by December. Bitcoin, the world’s biggest cryptocurrency, is hovering around $60,000 (€53,000) and has more than doubled since the start of this year; this coin has the highest rank and is all over the world both for good and some bad. Many people have speculated billions in holding of crypto located in India and that has the government on high alert.
Will this be the start of countries ramping up regulation around crypto?