Indian Government Cryptocurrency bill recommends banning private cryptocurrencies, with certain exceptions

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The government recently announced that it will introduce a Bill on cryptocurrencies alongside 25 other Bills during the session of the Parliament starting November 29, according to the Lok Sabha website.

Reports have claimed that these currencies are being used to lure investors & funds are supposedly being raised for terror-related activities.

The bill aims to prohibit all private cryptocurrencies in India, but leaves room for certain exceptions that promote the underlying technology and its various use cases.

Also Read: What the Indian Prime Minister said on Crypto-currency at the Sydney Dialogue

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The central bank of India is creating a platform where the country has its own digital currency- to be released in the future.

WazirX CEO, Nischal Shetty, told that the Indian government still has not given their approval to this kind of crypto-currency. He mentioned that they would have to wait to see the contents of the changelog bill before making any decision on whether to allow it or not. Bitcoin is a public cryptocurrency that operates using public blockchains. It has been around since 2009 and now holds a total value of over $3 billion USD.

He also said, “This is a big moment for India… Our nation has come a long way in these 3 years! It speaks volumes about how determined we are to dominate the web 3.0 era.”

The government’s latest proposal seems to be quite similar to the one they presented in the past. The only thing that’s unsettling crypto investors now is the clause about banning private cryptocurrencies. Apart from that, crypto prices are looking really good. This means that only those backed by the government will be allowed to share messages online, not the rest. But it’s not time to worry yet. We need to wait until the final bill is tabled in parliament before making any conclusions.

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Sathvik Vishwanath, Co-founder and CEO of Unocoin said, “No matter which definition you read, the definition of what constitutes a private cryptocurrency is not available.” Judging by what little info there is today, it seems like the government has had a change of heart. The information seems to be the same as it was before. We have to take a more cautious approach with this. It does not seem like any changes were made to the title, and it’s still there now. This is not to say that the bill released today doesn’t have its own set of problems – it could seem like either “nothing new” or “similar to the old”. But mere lines are not enough. If we can’t understand what’s happening now then it’s no surprise that investors are also very uncertain.

There are a few things about the Bill which need clarity to see its impact. Edul Patel, CEO of Mudrex, a global crypto investment platform, said “Indian Government had stated its intention to come up with their own cryptocurrency in order to track the movement of money.” The introduction of CBDCs promotes the idea of easing the tax calculation on crypto gains. It will be interesting to see what is classified as a cryptocurrency based on its use case.

There are no regulations banning the use of cryptocurrencies in this country yet. With the backdrop of the cryptocurrency being discussed, Narendra Modi held a meeting with officials on Saturday. The indication given was that strong regulatory steps could be taken.

The sources said that the proposed bill will focus on investor protection as cryptocurrencies are classified under a complex asset class category. This was confirmed last month by Finance Minister Nirmala Sitharaman, who had expressed that she was awaiting Cabinet approval for the creation of a policy that provides certainty on cryptocurrency investments.

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There’s been a lot of concern around cryptocurrencies as we move to the end of the year. The Government and RBI among other agencies have voiced their thoughts on these digital currencies

The upcoming three-week-long session will start on November 29 and end on December 23.

The Parliamentary Standing Committee on Finance met to discuss the pros and cons of cryptocurrency. Several members were in favor of regulating crypto exchanges rather than an outright ban on them.

It was felt at the meeting called by the Prime Minister that misleading youth about cryptocurrencies should be stopped. Sources said this happened at a meeting the PM called.

A government panel recommended that all currencies other than those issued by the state should be banned.

Earlier, RBI had said that the unregulated growth of cryptocurrencies poses threat to the macroeconomic and financial stability of the country.

Shaktikanta Das, Governor of RBI, has reiterated his position on not allowing crypto-currency saying that it is a serious threat to the financial system since they are unregulated.

The central bank wants to provide an official digital currency. The Supreme Court’s verdict on March 4, 2020, has set aside a ban that RBI had imposed on banks and other entities it regulates from dealing in virtual currencies.

The Banking Laws (Amendment) Bill, 2021 will also be tabled to privatize two Public Sector Banks.

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