The Indian government is inching closer to imposing a complete ban on all private cryptocurrencies in India and in the process of sending a new Cryptocurrency Bill to the Union Cabinet soon. KC Rama Murthy, BJP MP from Karnataka, in recent Rajya Sabha proceedings, questioned Anurag Thakur, Minister of State for Finance, whether a new cryptocurrency bill is in the making.  

Murthy asked, “There is no doubt that the problem of bitcoins and other cryptocurrencies is escalating and the circular issued by the RBI also has limited impact. I would like to know from the honorable finance minister whether there is any proposal to bring in a bill to curb cryptocurrency in the country?” 

Minister of State for Finance and Corporate Affairs Anurag Thakur responded to the question saying that cryptocurrencies are complex in nature and are neither currencies nor assets. Thus they are outside the regulatory power of the RBI or the SEBI, and hence, the government will be announcing an appropriate bill on cryptocurrency.  

Anurag Thakur responded to Murthy’s question saying, “Regulatory bodies like RBI and Sebi etc also don’t have a legal framework to directly regulate cryptocurrencies as they are neither currencies nor assets or securities or commodities issued by an identifiable user. The existing laws are inadequate to deal with the subject. The government had formed an inter-ministerial committee and the committee has given a report. Post that there was a meeting of the empowered technology group which happened earlier. The committee of secretaries which was chaired by the cabinet secretary has also its given their report. The bill is being finalised and will be sent to the cabinet soon. So we will be bringing the bill soon.” 

It should be noted that prior to this, the Reserve Bank of India (RBI) had categorized cryptocurrency transactions as criminal in nature, and had banned doing so. However, Supreme Court squashed RBI’s ruling and went on to lift the ban.  

According to reports, the Indian government has approached the RBI to launch the RBI-backed Central Bank Digital Currency (CBDC). Although this is certainly not the first time a government has tried to control and act against cryptocurrency, it does leave investors and cryptocurrency enthusiasts uncertain about the future of Bitcoin, Ethereum and other digital currencies.  

Difference between CBDC and Cryptocurrency 

As of today, cryptocurrency is a name given to a currency that uses cryptography to create new currency units, to secure the transactions and to verify if the transfer of currency is authentic or not. Cryptocurrency uses blockchain technology which makes the currency completely decentralized. 

This means that there is not one single regulatory body that controls the currency. Today there are over 6700 publicly traded cryptocurrencies which include Bitcoin, Ethereum, XRP, Dogecoin, etc.  

But unlike cryptocurrency, which is overseen by the entire ecosystem of people who create the currency (known as miners), the CBDC is a digital currency that is issued by a Central Bank The value of a CBDC will be similar to the traditional fiat currency issued by the central bank of a country.  

One of the biggest differences between CBDC and Cryptocurrency like bitcoin is the way they are issued. The CBDC is issued by the central bank. The way a country can create as much fiat currency as it wants, the same could happen with CBDC as well. But the algorithm of Bitcoin is such that it comes with a predetermined number. That’s why Bitcoin cannot exceed the given 21 million units. This keeps the value of bitcoin rising as the demand is rising due to the fact that the supply is limited.  

China was the first country to announce the CBDC pilot. The country will issue approximately 40 million yuan which is roughly $6.2 million as part of its latest pilot in CBDC. Countries like Russia, Singapore, Japan, and the UK have also been mulling over issuing their own bank-backed digital currency.  

 Also Read: Everything You’d Want To Know About Cryptocurrency- Explained