India is all set to ban private cryptocurrencies -- like ZCash and Dash -- in the upcoming Winter session of Parliament. The Centre will also seek to create a framework for rupee-based digital currency, to be issued by the Reserve Bank of India.
India is set to ban private cryptocurrencies in the Winter session of the Parliament, however, it will allow some exceptions to promote the underlying technology of cryptocurrency.
The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, is expected to be tabled in the Winter Session of Parliament for consideration and passing. The bill will also seek to create a framework for the official digital currency to be issued by the Reserve Bank of India.
The cryptocurrency bill, however, allows certain exceptions to promote the underlying technology and its uses. The details about the exceptions are yet to be known.
The development comes after the first-ever parliamentary panel on cryptocurrencies led by BJP MP and former Union Minister Jayant Sinha gathered views from the representatives of crypto exchanges, Blockchain and Crypto Assets Council (BACC), industry bodies, and other stakeholders on crypto finance on November 16.
Prime Minister Narendra Modi too had last week chaired a high-level meeting with officials from various ministries and RBI on the way forward for cryptocurrencies in India.
Reports had earlier claimed that the government is unlikely to ban cryptocurrencies, but it may take a cautious approach towards such investments and permit them as assets instead of currencies.
Sources have previously told CNBC-TV18 that the steps taken by the government will be progressive and forward-looking but misleading advertisements about cryptos need to be stopped. Due to concerns about potential risks to Indian investors, the Centre is also of the view that unregulated crypto markets should not be misused for money-laundering and terror financing, they said.
Market experts have been demanding regulation of crypto for quite some time now as they fear an unregulated environment with several platforms indulging in over-promising and non-transparent advertisements may mislead investors and result in massive losses.
RBI has also time and again voiced concerns about cryptocurrency. "Cryptocurrencies are a very serious concern and we have concerns from a macroeconomic and financial stability point of view. RBI has given detailed suggestions to the government and the matter is under active consideration of the government", RBI Governor Shaktikanta Das said on November 11.
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What is private cryptocurrency?
In an interview with Business Insider, Rahul Pagdipati, CEO of ZebPay highlighted an interesting aspect. "Its (the bill) success will depend on the details, particularly the definition of what the bill calls 'private cryptocurrencies'. This is not a common term. Bitcoin is not privately owned by anyone. It is a public good, like the internet," he said.
Cryptocurrencies are based on blockchain technology. A blockchain stores information electronically in digital format.
In a public blockchain, anyone is free to join and participate in the core activities of the blockchain network, according to Investopedia. On the other hand, a private blockchain allows only selected entry of verified participants.
(Edited by : Kanishka Sarkar, Abhishek Jha)
First Published: IST