India is poised to move forward with its plan to ban most cryptocurrencies in the country under a long-awaited bill.
Expectations had grown in recent months that the government might soften its view on digital currencies.
The ban would affect all private cryptocurrencies with some exceptions to allow for the promotion of the underlying technology and its uses.
Cryptocurrency prices fell on Indian exchanges following the announcement of the decision on the future of the bill.
Invoice focused on cryptocurrencies
According to a government bulletin, the ban is part of the cryptocurrency bill and official digital currency regulation that will be introduced in its winter session.
The planned legislation aims “to create a facilitative framework for the creation of the official digital currency that will be issued by the Reserve Bank of India (RBI)”.
The plan to ban all private cryptocurrencies appeared to be essentially the same as a previous draft bill presented in January.
In recent months it was thought that the government could soften its position on cryptocurrencies, possibly trying to get them regulated as an asset rather than as a means of payment.
Although the description of the bill has remained the same, the exact differences have yet to be confirmed as the latest draft is not yet available to the public.
Impact on the market
The value of several digital currencies reportedly declined after the bill was announced.
Bitcoin fell more than 13% on Indian exchange site WazirX, while Shiba Inu and Dogecoin both fell more than 15%.
However, Glen Goodman, author of The Crypto Trader, told the BBC’s World Business Report radio show that the global impact was “relatively small”.
“Even when China decided to ban cryptocurrency – and that was a really big deal – it didn’t completely slaughter the cryptocurrency markets,” he said.
According to a video report by the local newspaper India Today, Cryptocurrency trading is likely to continue according to the proposed law, provided that users purchase from exchanges that meet certain requirements.
The report added that the bill could focus on limiting who is allowed to create cryptocurrencies, with the aim of protecting investors.
According to the CoinDesk website, the RBI, the country’s central bank, is considered to have conservative views on cryptocurrency.
In March 2020, India’s Supreme Court overturned an RBI-imposed digital currency trading ban for two years.
And last week, RBI Governor Shaktikanta Das said the bank has “serious concerns from a macroeconomic and financial stability perspective” and that blockchain technology can thrive without cryptocurrencies.
However, Goodman highlighted the recent ban in China and El Salvador’s plan to build a Bitcoin city at the base of a volcano with the cryptocurrency used to fund the project.
“Governments take very different approaches to how they see it,” he said. “As a threat, an opportunity or something in between.”
Goodman said the Chinese government wants to get rid of all digital currencies except the one it is creating.
“They want to dominate cryptocurrencies and it seems to me that the Indian government had the same idea.
“They think, ‘well, if China is doing it, then we can do it too.’
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