Currently, El Salvador is the only country to recognise cryptocurrency as a legal tender.
The Centre is likely to bring a Bill in the winter session of Parliament to bar all cryptocurrencies in India, barring a few exceptions, and create a framework to regulate digital currency issued by the Reserve Bank of India (RBI). In response, all major digital currencies saw a fall of around 15 per cent and more, with Bitcoin down by around 18.53 per cent, Ethereum fell by 15.58 per cent, and Tether down by 18.29 per cent.
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The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, is listed for introduction in the Lok Sabha during the winter session, scheduled to start from November 29.
The Bill seeks to “create a facilitative framework for the creation of the official digital currency to be issued by the RBI. It also seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.
The Reserve Bank has voiced “serious concerns” about private cryptocurrencies. Bitcoin, the world’s biggest cryptocurrency, is hovering around $60,000, and its price has more than doubled since the start of this year, attracting hordes of local investors.
Industry estimates suggest there are 15 million to 20 million crypto investors in India, with total crypto holdings of around Rs 40,000 crore ($5.39 billion).
Recently, there have been a rising number of advertisements promising easy and high returns on investments in cryptocurrencies, amid concerns over such currencies being allegedly used for luring investors with misleading claims.
Last week, the Standing Committee on Finance, chaired by BJP member Jayant Sinha, met the representatives of crypto exchanges, blockchain and Crypto Assets Council (BACC), among others, and arrived at a conclusion that cryptocurrencies should not be banned, but it should be regulated.
Private digital currencies have gained popularity in the past decade or so. However, regulators and governments have been sceptical about these currencies and are apprehensive about the associated risks.
On March 4, 2021, the Supreme Court had set aside an RBI circular of April 6, 2018, prohibiting banks and entities regulated by it from providing services in relation to virtual currencies.
Delivering a keynote address at the Sydney Dialogue on November 18, Prime Minister Narendra Modi had urged all countries to ensure that cryptocurrency does not “end up in the wrong hands”.
Currently, El Salvador is the only country to recognise cryptocurrency as a legal tender.
