With the growing popularity of digital currencies, many nations have put a ban on their usage. This is because the volatile nature of cryptocurrencies takes the governments into a state of tension. But the technical ease that digital currency has brought can not be replaced. So it has been decided that India accepts its own crypto.
Uncertainty over the legal status of digital currencies is flustering Indian investors who, as per unofficial estimates hold nearly $1.5 billion in cryptocurrencies. The Indian government in this regard plans to ban private cryptocurrencies and formulate their own digital currency that will be backed up by the RBI (Reserve Bank of India).
RBI has asserted that it is “very much in the game”, and is getting ready for the launch of its own digital currency. Governor Saktikanta Das recently affirmed,
“Central bank digital currency is a work in progress. The RBI team is working on it, technology side and procedural side…how it will be launched and rolled out.”
So now a list of private cryptocurrencies in India will be banned and the citizens will have to use those formulated by the Reserve Bank Of India as India accepts own crypto. Let us now have a look at the cryptocurrency ban in India latest news.
The Law On Use Of Digital Currency Proposed By The Government
Is cryptocurrency legal in India 2021? According to the Cryptocurrency and Regulation of Official Digital Currency Act 2021, all citizens are prohibited from the use of any private digital currency, and the actions put forward a regulatory policy for the creation and launch of an “official digital currency”. This act was scheduled to be introduced in the budget session of the parliament but was on hold as the government continued its discussion with the stakeholders. According to a senior government official,
“We have held extensive deliberations. There is the expert panel’s report, followed by inter-ministerial discussions, meetings by the Cabinet Secretary, and submissions by various people concerned. The Bill will take all of that into account.”
A 3-6 month exit period before banning the mining, issuing, and trading of cryptocurrencies has been discussed in the discussion among the ministries. The high power inter ministerial committee has suggested a ban on the use of all private cryptocurrencies. According to a source the final bill is yet to reach the cabinet.
RBI’s Banning Attempt
In 2018, the Reserve Bank of India stopped the regulated companies from dealing with businesses and customers that are related to digital currencies. After getting a petition from the digital currency exchanges in India, the measures of the Supreme Court were struck down in March 2020.
Even though not an official ruling, an informal request was issued recently by the RBI with the same intent as that of 2018, that lenders detach ties with digital currency exchanges. This decision affects the functioning of many crypto exchanges like WazirX. However, recently RBI clarified the statement that was put forward by the government allowing businesses with crypto companies.
Crypto Exchanges Operating In India
Amid such rigid regulations, global crypto exchanges are still wondering how to enter the markets of India. According to a report, exchanges like Kraken, KuCoin, and Bitfinex have all started talking to evaluate the Indian market better and understand all its entry points. While one exchange among these has already initiated due alertness for an Indian firm, the other two are still evaluating their options. They are deciding whether to establish their own subsidiaries in the country or to purchase a local firm.
India Accepts Own Crypto: Know How?
In a recent announcement, the Indian government has affirmed about their own digital currency – RBI to launch cryptocurrency. India is getting prepared for launching their own digital currency and has decided on the fact that India accepts own crypto banning all other private cryptocurrencies.
On Monday, in the Lok Sabha, the Union Ministry asserted that the government of Narendra Modi is still considering the report on banning private cryptos and formulating own crypto backed by the RBI that was made by Inter-Ministerial Committee (IMC) and which was headed by Subhash Chandra Garg.
Also, the government will inform whether a new law will be introduced in the parliament. The finance ministry in a written reply stated that,
“The government would take a decision on the recommendations of the IMC and the legislative proposal, if any, would be introduced in the Parliament following the due process.”
The ministry further added that,
“The high-level panel recommended in its report that all private cryptocurrencies, except any cryptocurrency issued by the state, be prohibited in India.”
Taking a quotation from the budget of 2018-19 the government said,
“It was announced in the Budget Speech for 2018-19 that the government does not consider crypto-currencies 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. The government will explore the use of blockchain technology proactively for ushering in the digital economy.”
In the meantime, RBI waits for clarity in information from the government regarding its desire to launch its own cryptocurrency which will require a legislative backing from the government.
The government has formed an inter ministerial committee in 2017, which is headed by the economic affairs secretary along with the secretary of the Ministry of Electronics and Information Technology, RBI deputy governor, and Sebi chairman as members to analyze the problems that are associated with digital currencies and formulate specific action. According to the press release that was put forward in this regard,
“As for private cryptocurrencies, given the risks associated with them and volatility in their prices, the group has recommended the banning of the cryptocurrencies in India and imposing fines and penalties for carrying on any activities connected with cryptocurrencies in India.”
Conclusion
The popularity of digital currency has led to its wide usage. But it’s highly volatile nature is the real concern. So India accepts own crypto banning other private virtual currencies. In this regard, the Indian government has laid an announcement for the launch Indian cryptocurrency that will be backed up by the Reserve Bank of India. But the RBI cryptocurrency name is not yet decided.
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