In a latest development, the Central government announced to introduce a bill to ban only the “private” cryptocurrencies. However, soon after the announcement, all crypto prices crashed by 15 per cent and more.
The government will introduce the Cryptocurrency & Regulation of Official Digital Currency Bill, 2021 in the Parliament's winter session, which seeks to prohibit all private cryptocurrencies in the country, with a few exceptions to promote underlying technologies.
Therefore, investors trading in public blockchain-based cryptocurrencies may breathe a sigh of relief. Firstly, there is a need to understand what are the private and public cryptocurrencies.
Private Cryptocurrency
The Central government has not yet clarified what exactly constitutes as ‘private’ cryptocurrency. However, it could refer to Monero, Dash, and others of the sort, which conceal the transaction information to offer privacy to users.
Monero offers privacy and is, hence, a private token.
Public Cryptocurrency
Cryptocurrencies such as Bitcoin, Ethereum offers anonymity, therefore, they come under the public blockchain network. Such type of crypto tokens won't be banned transactions made using these networks are traceable while still providing a degree of anonymity to users.
Can Govt put a blanket ban on cryptocurrency?
It can be a little difficult to ban the tokens as they lack any inherent value or liquidity. Millions of people around the world could, theoretically, hold such a currency, which are basically pieces of code that can't be ‘banned’.
However, there are always ways for governments to create barriers to transactions and restrict entry of such digital tokens. A blanket ban would force crypto exchanges to stop operations in India.
Meanwhile, Nischal Shetty, the CEO of WazirX, India’s largest crypto exchange platform, tweeted: “The crypto regulation bill has been listed for the winter session. The description hasn’t changed much. There will be speculation on both sides. The good thing is more people within the government are aware of how crypto works.”
Is cryptocurrency legal in India?
At present, there is no legislature that covers cryptocurrecies in India. However, that does not make cryptocurrency illegal in the country. It simply indicates that there is no regulatory framework to safeguard cryptocurrency owners in the country.
In accordance to it, the government will also create a framework for an official digital currency to be issued by the Reserve Bank of India (RBI) during Parliament’s Winter Session starting November 29.
The bill is one of 26 new legislations on the government's agenda for the winter session of parliament.
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