The Indian government is looking towards a new bill that will ban the majority of private cryptocurrencies from the digital currency market in an attempt to better control the industry, said the government on Tuesday.
Authorities said that the government will only be allowing specific cryptocurrencies to promote their underlying technology and uses based on a legislative agenda for the winter session that is set to start later this month. The bill is known as the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021.
Bill To Ban Crypto in India
Officials are also looking to use the bill to construct a framework for the official digital currency that the Reserve Bank of India will issue later. In a statement, the central bank said that it had "serious concerns" regarding private cryptocurrencies and announced plans to launch its own digital currency by December.
Large groups of local investors were attracted to Bitcoin, which is the world's largest cryptocurrency with a price hovering around $60,000 each. Since the start of the year, the crypto's price has doubled, Reuters reported.
Indian Prime Minister Narendra Modi said earlier this month that all democratic nations must cooperate with each other to make sure that cryptocurrency did not fall into the wrong hands. The official's first public comment regarding the subject of crypto also argued that the industry could spoil the youth.
The bill's proposal to have a pre-verification approach would create obstacles for thousands of peer-to-peer currencies that thrive on being outside regulatory scrutiny. The Indian government earlier this year considered labeling the possession, issuance, mining, trading, and transfer of crypto-assets as criminal acts.
Recently, Modi also chaired a meeting where officials discussed the future of cryptocurrencies in India. The talks occurred amid rising concerns that unregulated crypto markets could be used for money laundering and terror financing schemes, Euro News reported.
State of Cryptocurrencies
The announcement of the bill has dealt a huge blow to cryptocurrencies in India, causing prices to drop. Bitcoin fell more than 13% on WazirX while both Shiba Inu and Dogecoin fell more than 15% just a few hours after the announcement. However, the price drops were only limited to Indian trading platforms.
The bill initially seems similar to the draft bill submitted in January but certainties cannot be made until it is made publicly available. In recent months, however, more are expecting the government to soften its views on crypto and instead regulate digital currencies as assets instead of a means of payment.
The co-founder of Crypto India, Aditya Singh, said that the latest bill was still a mystery because it was never made public. The official said it was difficult to determine what can be gained because the bill could be an amended version of the initial draft bill the IMC committee revealed in January. Singh said that while the two bills shared the same title and description, there was a large possibility that the content had changed significantly. She noted that India's Finance Minister, Nirmala Sitharaman, made a recent statement saying the government will not move forward with a blanket ban on crypto, CoinDesk reported.