Plans India To introduce a law to ban private cryptocurrencies, such as Bitcoin, and set a framework for an official digital currency issued by the central bank, according to a legislative agenda included by the government.
The agenda, published on the House of Representatives website, said: The law creates a framework to facilitate the creation of the official digital currency issued by the Reserve Bank of India RBI.
She said The agendaThe legislation, which is listed for discussion in the current parliamentary session, seeks to ban all private cryptocurrencies in India, however, it allows for some exceptions to enhance the underlying technology of cryptocurrencies and their uses.
In mid-2019, an Indian government committee recommended that all private cryptocurrencies be banned, with a prison sentence of up to 10 years and heavy fines for anyone dealing in digital currencies.
In the same year, the then Indian Finance Minister said: The government does not recognize the cryptocurrency as legal tender or a coin and is taking all measures to eliminate the use of these crypto assets to finance illegal activities or as part of the payment system.
However, the committee asked the government to consider launching an official government-backed digital currency in India, to function like banknotes, through the Reserve Bank of India.
In April 2018, the Reserve Bank of India ordered financial institutions to cut all ties with individuals or companies dealing in virtual currencies, such as Bitcoin, within three months.
This proposal was challenged by many exchanges and traders, who filed a lawsuit in the Supreme Court, and the country’s Supreme Court ruled in their favor in March 2020, and this ruling was considered historic.
India’s Supreme Court allowed banks to handle cryptocurrency transactions, which resulted in the revocation of the central bank ban which dealt a major blow to the booming industry, but did not affect the previous circular at the policy level.
Governments around the world are looking for ways to regulate cryptocurrencies, but no major economy has taken the drastic step of imposing a blanket ban on owning them, despite raising concerns about misuse of consumer data and its potential impact on the financial system.