Indian Government’s Cryptocurrency Ban Looms; Tells Investors to Transition Out of Bitcoin
The Indian government appears to be focused on its mission to eradicate cryptocurrencies from the country.
However, a new report sheds some light on its approach to phasing out digital assets, explaining that the ban will follow a transition period.
India To Tow China’s Line In Crypto Regulation
Citing a senior official at the Indian Finance Ministry, the new ban will be absolute, affecting transactions from Indians on foreign crypto exchanges.
News of the prospective ban has rocked India’s crypto sector for weeks now, after a bulletin from Lok Sabha, the country’s lower house of parliament, confirmed the bill’s existence.
Titled the “Cryptocurrency and Regulation of Official Digital Currency Bill,” the anti-crypto bill shows the government’s willingness to explore a Central Bank Digital Currency (CBDC).
However, it won’t allow private cryptocurrencies to exist in the country.
“To create a facilitative framework for the creation of the official digital currency to be issued by the RBI,” the purpose of the Bill stated.“
The Finance Ministry official explained to Bloomberg that while Indians widely use cryptocurrencies, the lack of support from the Reserve Bank of India (RBI) made them consistent targets for lawmakers. So, the ban will likely move forward.
Crypto investors will be given a transition period between three to six months following the bill’s passage to move their crypto holdings to more recognized and regulated markets.
For now, the government is yet to pick an execution timeframe for the proposed bill. Finance Minister Nirmala Sitharaman has reportedly explained that a decision will be made when the bill eventually passes through parliament.
Waiting For Doomsday
Although crypto usage has gone mainstream in India for the past five years, the government is still struggling to create a regulatory framework to guide it.
This decision to ban digital assets is also not entirely new. In 2018, the RBI issued a circular prohibiting banks and financial institutions from providing services to crypto-facing companies.
At the time, the regulator cited cryptocurrencies’ high volatility and the potential criminal use as the reasons for its hardline approach towards the assets.
While the Indian Supreme Court reversed the ban last year, this new proposal will most likely be more concrete if it passes through parliament.
The recent announcement has seen the Indian crypto community struggle. Most are uncertain about how much damage this ban would cause. Cryptocurrency prices fell as much as 30% in the country against other global exchanges, per a report from the Economic Times. With a widespread panic already forming, this bill can’t bode well on any front.