The cryptocurrency industry is been requesting the Center to reconsider its announcement to ban private cryptocurrencies like Bitcoin in India. The industry stakeholders said that while the government is planning to create a Central Bank Digital Currency (CBDC), the definition of what the government considers “private cryptocurrencies” is also important.
The Indian government’s plan to “create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India (RBI),” was a part of the agenda in the upcoming Budget session of Parliament. The agenda stated that the legislation will prohibit all private cryptocurrencies in India. Although the government allows the use of Blockchain technology, many industry experts expect that the use of currencies like Bitcoin and Ethereum will be made illegal in the country.
Rahul Pagdipati, chief executive officer (CEO) of crypto exchange and wallet ZebPay said that,
“The digital currency bill to be introduced in the Lok Sabha is a welcome step. Its 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.”
The industry executives expect that the government’s concern is about the possible use of cryptocurrency as an alternative to the Indian Rupee (INR). They commented that cryptocurrencies are similar to assets like gold. WazirX founder, Nischal Shetty said that,
“As an industry, we’re in sync with the fact that INR is the only legal tender in India and about crypto being an asset/utility that people buy and sell”.
Padgipati said that,
“Bitcoin and most crypto assets are more like gold and not an alternative to government-issued legal tender. Crypto assets and digital government currency can coexist and together.”
The crypto industry has requested the government to take suggestions from the stakeholders before making a decision. The CEO of BuyUcoin, Shivam Thukral, said that,
“We urge the government to take the opinion of all the stakeholders before taking a decision that may affect the livelihood of the entire workforce employed in the digital asset industry in India.”
“We have faith in the government and hope that this bill will move India forwards, not backward,” said Pagdipati.
Earlier, India had once considered banning cryptocurrencies and the government floated a bill for “Banning of Cryptocurrency and Regulation of Official Digital Currency Bill” in 2019. The bill stated that will be imprisonment of up to 10 years for mining, holding, selling, trade, issuance, disposal, or use of crypto in India. The Reserve Bank of India (RBI) also issued a circular in 2019 where banks and other regulated entities were banned from doing business with crypto companies. It was done by the Supreme Court in the last year.
As per the data from Venture Intelligence, investments of nearly $24 million were made in crypto firms in 2020. It was after the Supreme Court’s decision came up from a mere $5 million in 2019. Indian crypto firms have also seen a successful year since the lockdown in 2020. Trading on cryptocurrency exchanges increased and Bitcoin’s sudden bull run attracted many investors too. But, the government’s current decision is threatening as it may put the future of the industry in disarray once again.