Crypto ban in India: 10 things you need to know about new cryptocurrency bill

We tell 10 things you need to know about the new cryptocurrency bill and what impact it could have on the future of crypto in India.

The winter session of Parliament is all set to begin from November 29th. We can expect several important bills to be tabled for debates and passages in the upcoming winter session. A key bill, which is expected to garner a lot of attention, will be on the future of cryptocurrency in India. The government is expected to move a bill to frame rules for cryptocurrencies aimed at prohibiting private coins while further providing a framework for the creation of an official digital currency to be issued by the Reserve Bank of India (RBI).

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The upcoming bill is listed among 26 items of legislation for consideration in the winter session of parliament. According to a bulletin issued by the Lok Sabha on Tuesday, the cryptocurrency industry is hopeful there won’t be a complete ban on cryptocurrencies. But since the news of the proposed bill was surfaced online, prices of all popular cryptos crashed due to panic sales.

The prices of Bitcoin and several other popular cryptos have been on a decline since the announcement of the ban by the Government of India. Major cryptocurrencies such as Bitcoin, Ethereum, and Tether saw a fall of around 18.53 per cent, 15.58 per cent, and 18.29 per cent, respectively. This has also impacted crypto exchange apps like WazirX and CoinDCX. Here we now tell you the 10 things you need to know about the new cryptocurrency bill and what impact it could have on the future of crypto in India.

Also Read: Cryptocurrency: what is cryptocurrency, how it works, and why is crypto market down?

10 important points you need to know regarding the new crypto bill

  • The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, is listed and set for introduction in the Lok Sabha winter session,  which is scheduled to start from November 29th. 
  • The upcoming Bill seeks to create an easy and convenient framework for the creation of the official digital currency of crypto, which will be issued by the Reserve Bank of India (RBI). It also plans to prohibit all types of private cryptocurrencies in India, however, it would allow for certain exceptions to promote various cryptocurrencies and their legal methods for trading.
  • A regulation mechanism will further be put in place so that cryptocurrencies are not misused. The government is concerned about illegal mining and underground transactions of cryptocurrency and hence wants to stop its role in any kind of “hawala” or terror funding.
  • Cryptocurrencies such as Bitcoin, which is even the world’s largest cryptocurrency hovering around USD 60,000 (approximately Rs 45 lakh) has seen it’s price almost double since the start of this year, attracting a huge amount of local investors, who could be now in further jeopardy after the introduction of the bill.
  • Recently, there have been a rising number of advertisements and applications promising easy and high returns on various investments in cryptocurrencies. The government wants to end such misleading claims from such sources amid concerns over such currencies being allegedly used for luring investors of promising a higher return of their money.
  • The bill also penalises mining, holding, selling, issuing, transferring, or use of cryptocurrency as a tender for exchange currency for now with a fine or further imprisonment of up to 10 years.
  • Private digital currencies have gained popularity in the past decade or so. Hence, regulators and governments of various countries have been skeptical about these currencies and are thus apprehensive about the associated risks attached to them.
  • Previously, on March 4th, the Supreme Court had set aside an RBI circular of April 6, 2018, prohibiting banks and financial entities regulated by it from providing services in relation to virtual private currencies such as Bitcoin and Ethereum.
  • Honorable Prime Minister Narendra Modi while delivering a keynote address at the Sydney Dialogue on November 18th had urged all associated countries to ensure that cryptocurrency does not “end up in the wrong hands” and its use doesn’t promote illegal activities.
  • While China has banned cryptocurrency to promote it as their government’s digital currency, El Salvador is the only country, for now, to have made it as legal tender for the exchange of goods and services.