Cryptocurrency is still being frowned upon by many world governments and India is one of them. The country has reportedly passed a bill to ban all private cryptocurrencies in the winter session of Lok Sabha which is scheduled to start on November 29th of this year.
The recent crackdown has resulted in people selling their digital currencies leading to the crash of WazirX, India’s biggest cryptocurrency exchange company.
One of the main reasons why the Indian government is against cryptocurrencies is due to their volatility as well as being unregulated. There are also potential cyber-security risks such as loss or even the destruction of private keys.
The International Monetary Fund (IMF) has stated that crypto-assets have the potential of disrupting different aspects of the global financial system which is why they need to be monitored closely.
The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 will be introduced in the Lok Sabha later this month. If the bill is passed, it may only ban private cryptocurrencies such as Monero, Dash, Zcash, and so on.
Even though the crackdown is ongoing and has led to many selling off their crypto assets, one thing unclear yet is the fact that the Indian government has failed to explain what it means by “Priave cryptocurrency”.
Hence, it is unclear whether it will allow people to trade Bitcoin, Ether, and so on which are public block-chain based cryptocurrencies.
According to a bulletin issued by the Lok Sabha, it will allow certain exceptions to promote the underlying technology of cryptocurrency and its uses.” It further said that it seeks “to create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India.”
The fear also includes the fact that cryptocurrencies could result in economic imbalance and impact inflation and forex.