The government on Tuesday had listed the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 to be introduced during the Winter Session of the Parliament noting that the bill seeks to prohibit all private cryptocurrencies in India.
There is a lack of clarity on the definition of private cryptocurrencies currently. (Image: Pexels)
Prices of cryptocurrencies in Indian rupee terms have recovered from around 20-25 per cent decline after the government listed the Crypto bill on Tuesday for introduction in the Parliament this Winter Session. In the 24-hour duration, Bitcoin had jumped by 6.34 per cent, as per data from WazirX, at the time of filing this report. Likewise, Ethereum was up by 5.55 per cent, Binance Coin by 11.7 per cent, Tether by 8 per cent, Solana by 5.22 per cent, Dogecoin by 10.45 per cent, etc., indicating some calm among investors.
While Bitcoin was trading at Rs 44.79 lakh, prices for Ethereum, Dogecoin, Shiba Inu stood at Rs 3.36 lakh, Rs 16.7, and Rs 0.003011 respectively, at the time of filing this report. The impact of the government’s announcement on overseas prices was negligible. The government on Tuesday had listed the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 to be likely introduced along with 25 other bills noting that the Bill seeks to prohibit all private cryptocurrencies in India, however, “it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.”
“At the moment, the extent of the ban under the proposed legislation doesn’t seem to be clear. While the bill’s summary states its intention is to prohibit all non-government cryptocurrencies, it also talks about allowing for “certain exceptions”,” said Mikkel Morch, Executive Director & Risk Management at crypto/digital assets hedge fund ARK36.
However, if investor protection really is the main focus, Morch said the bill may simply seek to introduce tighter regulation for digital asset investments, limiting it to professional investors while curbing the ways individuals can obtain direct exposure to it. In any case, an outright ban on such investments might be difficult to implement as the digital asset ecosystem in India extends far beyond cryptocurrencies and includes other investable assets such as NFTs which are becoming increasingly popular in India, he added.
Nonetheless, there is a lack of clarity on the definition of private cryptocurrencies. According to various reports, private cryptos could be ones that are controlled by a central authority like a central bank. Going by this thought, all cryptos including Bitcoin would be banned as none of them are government or central bank-backed. On the other hand, private cryptos could also be considered as those that are on the private blockchain and could not be significantly tracked. Cryptos that are less likely to be tracked with multiple privacy features are Monero, Zcash, Dash, Verge and others, unlike Bitcoin.