India plans law that will prohibit 'all private cryptocurrencies,' with 'certain exceptions'
India plans to introduce, evaluate and enforce a bill to prohibit "all private cryptocurrencies" in the country, according to a legislative agenda for the winter session.
The Indian government said Tuesday evening that the proposed law will permit "certain exceptions" to promote the underlying technology of cryptocurrency and its applications.
The bill -- called Cryptocurrency & Regulation of Official Digital Currency Bill 2021 -- will also create a "facilitative framework" for the creation of the official digital currency for the country, the legislative agenda adds.
It's worth pointing out that the description of the bill is identical to the one New Delhi listed for the previous parliamentary session earlier this year. The winter session of the parliament starts November 29.
Lawmakers in India have for several quarters been discussing risks of cryptocurrency trading and trialing a central government-backed digital currency.
An increasingly growing number of Indians, many of whom have never invested in the stock market or any other asset class, have started to trade cryptocurrencies in recent quarters, prompting concerns among some that they might end up losing their money.
Local cryptocurrency exchanges have reported growing volumes of transactions and user bases this year and raised record capital from high-profile investors. CoinDCX, backed by B Capital, and CoinSwitch Kuber, backed by a16z and Coinbase Ventures, became unicorns this year.
India's Prime Minister Narendra Modi, and several other lawmakers as well as several industry stakeholders have held several meetings in recent quarters to discuss the cryptocurrency space and some of the recent developments.
At least one top Indian minister recently held conversations with a prominent venture capitalist and suggested that India is likely to formulate a law that will support innovation following China's decision to ban cryptocurrency trading and mining, according to a source directly familiar with the matter.
Many lawmakers, in the meanwhile, have also expressed concerns about the nature of ads carried by cryptocurrency exchanges. A consensus was reached in that meeting that these "irresponsible advertisements", which promised wild profits to consumers by investing in crypto, were misleading youths in the nation and must be stopped, TechCrunch reported earlier.
Several Bollywood stars, including legendary Amitabh Bachchan, Ayushmann Khurrana and Ranveer Singh, who have starred in several of the country’s biggest blockbusters, have promoted cryptocurrency trading in TV and newspaper ads.
Lawmakers have also expressed concerns around potential misuse of using crypto trading vehicles for laundering money and financing terrorism efforts.
Shaktikanta Das, governor of the central bank Reserve Bank of India, said last week that the country needs to have much deeper discussions on the issue of cryptocurrencies.
"When the central bank says that we have serious concerns from the point of view of macroeconomic and financial stability, there are far deeper issues involved," Das said at an event. "I'm yet to see serious, well-informed discussions in the public space on these issues."