India is proposing a new bill that if passed, would see the combination of regulation and a ban in the crypto world.
India Has a New Crypto Bill in Play
The nation has had a rather up-and-down relationship with bitcoin and crypto. Roughly three years ago, India stated that it would not allow cryptocurrency or blockchain businesses to access standard financial tools like checking and savings accounts. It was widely – and incorrectly – reported that India was full-on banning crypto activity, but this wasn’t quite true. It just meant that traditional financial firms could not offer tools or products to blockchain enterprises.
It was later decided that this rule was unconstitutional, and in early 2020, things were reversed. It looked like India would potentially become a serious crypto haven following this reversal, but now it appears the country has been going back and forth on a full ban of crypto activity in which all trading and transactions are ruled offensive and punishable by law.
Under the new bill – which is called “India’s Cryptocurrency and Official Digital Currency Bill of 2021” – the development of a central bank-issued digital currency would be issued. It would be handed out to residents via the Reserve Bank of India (RBI). In addition, all private cryptocurrencies would be outlawed, though the government would permit current traders to exit their holdings prior to experiencing any repercussions.
There would also be some alleged exceptions to the rule of “no private cryptocurrencies.” Kunal Sawhney – CEO of equities research firm Kalkine Group – explained in an interview:
These exceptions can be anything – it might just be the roadmap for another finance bill that will bring cryptos under the tax ambit from the next financial year that starts from April 1, 2022. Or it may allow trading in high market cap and relatively stable cryptos like bitcoin and ether but ban hyper volatile assets like meme currencies. It may also be about India’s central bank using the underlying blockchain technology to create its own official version of digital rupees. As of now, the synopsis document has just triggered speculation.
He stated that crypto is simply too big to be ignored, and thus India is not likely to follow in China’s footsteps, which recently issued a blanket ban on all crypto activity. No trading, no mining, nothing.
Things May Move Backwards
However, he did mention that whatever negative or anti-crypto action India took would likely have unhealthy repercussions on the market, and traders could potentially expect to see some sort of retreat following such an implementation. He commented:
If at all the ban does come, it will have big repercussions considering India is a major emerging economy and a member of the UN and the G20. Other major economies such as the US will then face pressure to clarify their stance on these volatile assets.