Government’s New Digital Currency Bill Seeks To Prohibit All Private Cryptocurrencies In India

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The government’s legislative agenda for the upcoming winter session of Parliament showed that it aims to ban “private cryptocurrencies,” mere days after Reserve Bank of India governor Shaktikanta Das warned that crypto-currencies pose a significant threat to macroeconomic and financial stability

The “Cryptocurrency and Regulation of Official Digital Currency Bill, 2021” is expected to be introduced by the government. The bill will be considered and passed during the winter session of Parliament, which begins on November 29.

The bill aims “to create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India. The bill also seeks to prohibit all private cryptocurrencies in India; however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses,” it said in a notification on the Lok Sabha website.

The government has yet to clarify the meaning of private crypto-currencies. According to certain definitions, Bitcoin, Ethereum, and plenty of other cryptocurrencies are built on public blockchain networks, which means that transactions done on the networks may be traced while maintaining user privacy. Private cryptocurrencies, on the other hand, could refer to Monero, Dash, and other cryptocurrencies that, despite being constructed on public blockchains, disguise transaction information to provide users with privacy. In other words, while Bitcoin provides anonymity, Monero provides privacy and is hence a private token.

A blanket ban in India would force crypto exchanges to close their doors. When China declared a blanket ban on cryptocurrency in September, one of the world’s top crypto exchanges, Huobi, had to do the same. The exchange’s creator told the Financial Times on November 8 that income from Chinese customers will be zero in the September to December period.

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