India is reconsidering banning the use of private cryptocurrencies like Bitcoin. Furthermore, they are planning the creation of a central bank digital currency (CBDC).
In recent days, the Indian government said that it is reconsidering banning cryptocurrencies like Bitcoin in that Asian country. In this sense, the Ministry of Finance has initiated a series of consultations about the subject.
The reports reveal that India is seeking to introduce a law to reconsider banning decentralized cryptocurrencies. The government considers that a legal framework is more effective than just a circular from the Reserve Bank of India (RBI).
According to the agenda that the Lower House posted on its website, they seek to establish a framework for creating a CBDC. That legislation seeks to “ban all cryptocurrencies in India, but allows exceptions that promote blockchain technology and its uses.”
India Proposes Banning Decentralized Cryptocurrencies
The Indian government introduced the cryptocurrency bill entitled “The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021.” They included it for consideration in the Lok Sabha parliamentary session, the Lower House of the Indian Parliament.
They seek to create a legal framework for a digital currency that the Reserve Bank of India (RBI) would issue. However, its main objective is to ban the use of all decentralized cryptocurrencies.
Parliament’s budget session began on January 29th and will end on April 8th. That group of official meetings will have a recess between February 15th and March 8th.
According to the local newspaper The Economic Times, “the Ministry of Finance has moved a note for an inter-ministerial consultation.” A senior government official said that they will send the note to the cabinet after the consultations and from there to Parliament.
Measures that Are Nothing New
In 2018, a series of frauds occurred in India, so these measures are not new in the country. At that time, the Central Bank of India prevented transactions with cryptocurrencies.
The ban brought exchanges to the Supreme Court, where they managed to obtain a favorable judgment in March 2020. Interestingly, after the lifting of the ban, the number of transactions increased by 450%. TechSci Research reported that this took place in just two months, demonstrating Indians’ interest in cryptocurrencies.
The government introduced the document entitled “Banning of Cryptocurrency and Regulation of the Official Digital Currency Law 2019” last year. They propose a penalty of up to 10 years in prison for offenders, in addition to fines for those who trade with digital currencies.
Reactions of the Crypto Community to the Government’s Decision
The government’s decision has caused many reactions of disagreement in the Indian crypto community. One Twitter user wrote that the ban on cryptocurrencies is “insane”. Another thinks that the RBI should not ban the use of Bitcoin.
The founder of the Indian cryptocurrency exchange WazirX, Nischal Shetty, said that “it looks like a hasty move.” He added that he hopes that “this is a precursor to positive crypto rules.”
Morgan Creek Digital co-founder Anthony Pompliano said that “Bitcoin adoption in India is about to explode.” He believes that “the network does not care about the arbitrary rules of misinformed elites.”
In this sense, Pompliano gave as an example that “the government of Pakistan tried to ban Bitcoin, but adoption increased, rather than decreased.” He believes that “India is about to conduct the best Bitcoin marketing campaign for its many millions of citizens.”
By Alexander Salazar
