The Indian crypto community has engaged in discussions with the government about how to perceive cryptocurrencies and blockchain technology before finding ways to regulate the industry since the government imposed a curfew on banks serving crypto companies in April 2018.
In the latest update on January 29, the government announced its plans to present the House of Representatives of Parliament (Lok Sabha) to the next session of the cryptocurrency bill and regulation of the official digital currency law for 2021.
As stated in Lok Sabha’s post, the bill will have a dual agenda. The first is “creating a favorable basis for creating an official digital currency issued by the Reserve Bank of India” and the second is “banning all private cryptocurrencies in India,” considering that this would allow for some exceptions. … to promote blockchain, the core technology of cryptocurrency.
The announcement of the bill sparked panic
When the budget was due to be announced just two days later on February 1, the proposed bill that was put on the agenda of Parliament caused a wave of panic in the Indian cryptocurrency industry as some speculated that the government would announce its intention to ban “special” cryptocurrencies on budget. … …
This panic caused Bitcoin (BTC) to trade at a 20% discount at global prices, even though it usually traded at a premium of 10%. However, the public breathed a sigh of relief when current Finance and Enterprise Minister Nirmala Sitraman said nothing about this during the budget announcement. It also led to a rebound in the bitcoin price in India after the budget announcement.
“The fact that it is not mentioned in the budget shows that the government is in no hurry to make a decision,” Nishal Shetty, CEO and founder of WazirX Cryptocurrency Exchange, told Cointelegraph. Shetty also spoke about how the government would continue to work on this bill, if it were to be presented at all in the next parliamentary session:
“If presented, it would most likely be referred to a standing committee for discussions with the crypto industry in India before proceeding with sector regulation. After all, this is a very important bill related to finance and technology. I am confident that the standing committee will discuss with stakeholders in the field of Encryption first. ”
Although, according to CNBC-TV18, the government could have taken the “decree route” to pass the law instead of submitting it to Parliament and letting it go through the usual stages of a bill that passes through Parliament.
The Road Decree means that the law can be enforced with the approval of President Ram Nath Kovinda even when Parliament is not in session. The report also says that the ruling can be executed within one month of its issuance. This has led to a further recovery in the cryptocurrency industry, raising fears of an imminent ban if it goes into effect.
Recently, Twitter discussions in India were updated with the hashtag #IndiaWantsCrypto. This hashtag has gained much popularity in the Indian crypto community as different investors and other crypto personalities have also started using the same hashtag. After announcing the crypto law in India, WazirX continued an industry-leading initiative in the form of an email campaign of the same name, Indiawantscrypto.net. This would allow citizens to write to MPs in their constituencies to encourage them to regulate cryptocurrency.
Does India really need a CBDC?
The bill, which will be debated in Parliament, also announced that the RBI will work on a framework for how to create an official RBI backed digital currency similar to its fiat currency, the Indian rupee.
This is mainly due to the fact that large economies like China have already reached the testing stage for their own digital currency, called electronic payment for digital currency, which is effectively a digital version of the renminbi. Neeraj Handelwall, co-founder of cryptocurrency exchange CoinDCX, told Cointelegraph:
We believe that in the coming years, each country will have its own independent digital currency, and the countries that adopt the first will reap great benefits. If CBDC emissions provide such huge benefits, then India should also not turn to them, think ahead and take a step in a similar direction. ”
While the Reserve Bank of India has referred to the CBDC as a legal tender in the country, similar to the Indian rupee, it has also described it as a central bank’s digital liability, clearly indicating the skeptical and troubling nature of the House of Representatives in Parliament. Against digital currencies in general. And this despite the fact that the government of India and the RBI are actively exploring blockchain technology.