The Indian Parliament is considering introducing a bill banning bitcoin and other cryptocurrencies in the Union Budget session that is going to be held on 1 February. The bill titled, ‘Cryptocurrency and Regulation of Official Digital Currency Bill’, 2021, aims 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.” 

On the order of business for the 2021 Budget Session of Lok Sabha session which commenced on Saturday, the Government listed a bill which if cleared, will ban private cryptocurrencies in India such as bitcoin, ethereum, ripple, etc. Given how the ruling Bhartiya Janta Party has significant control over both the houses of the Parliament, the probability of the bill’s passing is high. 

A booklet of the Central Bank also said how due to the recent popularity of cryptocurrencies, the regulators and governments are becoming increasingly wary about the risks that come with digital currencies. The booklet went on to say, “RBI is exploring the possibility as to whether there is a need for a digital version of fiat currency and, in case there is, how to operationalize it.” 

The news of a complete ban of cryptocurrency has caused some unease in the Indian cryptocurrency space. In the Cryptocurrency and Regulation of Official Digital Currency Bill, the government has labeled cryptocurrencies “private”. The language in itself has confused the cryptocurrency analysts and Chiefs of the cryptocurrency trading firms.  

In one such reaction, Nischal Shetty took to Twitter and said how “There’s no such thing as a ‘private cryptocurrency’. Cryptos, by their very nature, are decentralised and public.” 

Shetty is the founder of Wazir X, one of the nation’s biggest cryptocurrency exchanges.  

On the other hand, Sumit Gupta who is the founder of CoinDCX, another India-based cryptocurrency exchange, said how their platform along with other industry stakeholders are in agreement to have an open dialogue with the authorities.  

Earlier in 2019, the Reserve Bank of Indian had proposed another bill that would have deemed the possession of cryptocurrency in India illegal. However, the bill was quashed by the Supreme Court and was never passed in the Parliament. 

Since then, exchanges such as Wazir X, Unocoin, CoinDCX have seen a sharp and steady increase in their userbase and trading volumes. Wazir X was recently in the news for clocking in 1 million cryptocurrency traders on its exchange platform.  

Also read: India-based Crypto Investment Platform CoinSwitch Kuber Raises $15 Million

The unwavering positive sentiment in bitcoin and other cryptocurrencies is driven because of its high value over the past year. While the market is filled with proponents of traditional fiat currency, bitcoin’s price has risen over 700% since April 2020 showing awareness and interest. 

The new bill has also stated how there will be certain exceptions made through which the underlying technology of cryptocurrency (blockchain) will be used in a regulated way. 

The new bill which may end the nascent cryptocurrency space in India is yet to be released. As the government releases more information, clarity will also emerge as to just how the government plans to regulate digital currency. Till then the cryptocurrency investors and enthusiasts will have to out-wait this anxiety-filled period.