The “Cryptocurrency and Regulation of Official Digital Currency Bill” seeks to ban private cryptocurrencies —possibly any token not issued by the state. Such a path could deal a severe blow to the country’s booming crypto industry.
It is important to indicate that a number of cryptocurrency exchanges and other crypto-related businesses had gained legitimacy after a court ruling announced that cryptocurrencies were legal. The court also ordered the country’s Central Bank to retract any measures affecting cryptocurrencies as long as they were not explicitly framed as criminal conduct.
As reported by Cryptopotato, a regulatory framework prohibiting the use of cryptocurrencies seems like the next logical step as it would overturn the court ruling. If this initiative succeeds, an entire industry would be illegal as soon as the law came into force. And, this is apparently what Indian lawmakers are seeking.
According to official sources, the purpose of the law is clear and without room for subjective interpretations:
“To create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India. The Bill also seeks to prohibit all private cryptocurrencies in India; however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.”
The issuance of an RBI-controlled CBDC is one of the possible exceptions to the rule. The Indian government has been exploring the idea of a digital Rupee for at least two years. However, it has always been cautious about talking about any kind of progress or the project’s current status.
In 2019, Governor Shaktikanta Das stated that it was very early to speak of any formal progress on CBDCs. Such a cautious stance is key for India’s regulatory framework, since many of the crypto-related concepts are yet to be defined, and anything could change due to a technicism:
“Some discussions are going on. Technology has not yet fully evolved. It is still in very incipient stage of discussions and the RBI we have examined it internally,”
Considering that the parliament is controlled by a majority belonging to the Bhartiya Janata Party that aligns with Prime Minister Narendra Modi’s policies, the Bill has a chance of passing. Nonetheless, the road to outlawing cryptocurrencies has been quite uphill for the Indian government over the years.