The budget session of Parliament is all set to introduce a new bill that bans private cryptocurrencies and provides for an official digital currency to be issued by the Reserve Bank of India.
The Union Budget, which will be presented on February 1, is looking towards the introduction, consideration, and passing of the Cryptocurrency and Regulation of Official Digital Currency Bill.
Apart from prohibiting all private cryptocurrencies in India, the bill also seeks to create a facilitative framework for an official digital currency issued by the RBI.
However, as per a Lok Sabha bulletin, the bill allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.
In 2018, the Indian central bank had banned crypto transactions after a number of frauds came to the fore following PM Modi’s decision to ban 80% of the nation’s currency.
As a result, the Cryptocurrency trade was brought to a halt after the RBI asked all regulated entities, such as banks, to stop any dealings related to private cryptocurrencies as part of that order.
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However, the table’s turned when a supreme court bench, headed by Justice Rohinton F Nariman, quashed the central bank’s circular on grounds of disproportionality.
According to a report by Bloomberg, the court ruled that RBI had failed to show “at least some semblance of any damage suffered by its regulated entities’’ to back its decision to effectively bar cryptocurrencies in India.”
From then Cryptocurrency exchanges began operations yet again. The rapid surge in the price of Bitcoins accelerated its use by top banks, which had stopped dealing with cryptocurrency exchanges after the RBI’s order.
The dealings with the cryptocurrency became a point of global debate. Large Investment houses said that Bitcoins can be seen as an alternative to gold. JPMorgan said that “a crowding out of gold as an ‘alternative’ currency implies big upside for bitcoin over the long term.”
Earlier this week, Bridgewater Associates founder Ray Dalio said Bitcoin is “one hell of an invention” and added that he is considering cryptocurrencies as investments for new funds offering clients protection against the debasement of fiat money.
To further this cause, payment networks such as Paypal, MasterCard, and Visa also moved to set up systems that accept payments via cryptocurrencies. Also, this week, the RBI had reiterated that it was exploring the need for a digital version of the fiat currency.