Despite the benefits of the Digital Rupee, a blanket ban on crypto will strangulate India’s digital asset potential.
The Indian government has listed the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 for debate and discussion in the upcoming winter parliament session that is expected to begin by November 29.
Despite various attempts from stakeholders in the industry and crypto users in the country, the objective of the bill remains to be similar to a draft bill released in 2019.
The most prominent difference between 2019’s draft bill and the upcoming one is the omission of the word “banning of" in the title. However, according to the official website of the lower house of India’s parliament, the Lok Sabha, the bill will propose the prohibition of all private cryptocurrencies in the country.
The text of the upcoming bill has not been publicly released yet. However, concerns on whether the new bill will contain issues similar to 2019’s draft bill has been raised.
The definition of cryptocurrencies in the 2019 draft bill was heavily debated in the country with many calling it “too broad”. The bill essentially prohibited all digital tokens, even those that were not necessarily cryptographic in nature.
India is also expected to impose restrictions on all types of promotional materials and advertisements associated with crypto-based projects.
Regulators have been keen to clarify that a blanket ban on the trading and transactions via crypto will come with reasonable exceptions to ensure that the development of the underlying blockchain technology is encouraged in the country.
The Lok Sabha bulletin also stated that the Reserve Bank of India, the country’s central bank, will be allowed to legally launch the Digital Rupee as part of these exceptions:
“[The bill will] create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India."
The list of exceptions is likely to also include the use of crypto for experimentation, research, teaching and other activities that the government deems is in the public interest.