Paving the Way for Nationalization of Cryptocurrencies
The “Cryptocurrency and Regulation of Official Digital Currency Bill“ will aim to “prohibit all private cryptocurrencies in India,” but allow “for certain exceptions to promote the underlying technology [blockchain] of cryptocurrency and its uses,” it is reportedly said on the website of the lower house of the Indian parliament.
The legislation also aims to “create a facilitative framework for the creation of the official digital currency” that will be rolled out by the Indian central bank — The Reserve Bank of India (RBI).
The Asian country introduced a similar proposal in 2018 when it recommended prohibiting all private cryptocurrencies, including Bitcoin (BTC), and proposed up to 10 years of jail time for perpetrators. Its central bank said the decision was necessary to prevent the “ring-fencing” of the Indian financial system.
RBI also says that Bitcoin and other cryptocurrencies cannot be considered currencies as they do not exist in the physical form, nor were they issued by the government. At the time, the proposal raised fears among cryptocurrency startups in India, after which almost all of them have either shut down operations or relocated to operate in other markets.
However, a group of cryptocurrency exchanges and traders decided to challenge the recommendation and filed a lawsuit in the Supreme Court, which ruled in their favor in 2020.
The group of petitioners, which included the Internet and Mobile Association of India, had successfully challenged RBI’s proposal and said that India should look up to the majority of other countries that are not only allowing cryptocurrency trading but are providing support to the sector and launching their own cryptocurrencies.
After winning the case, tech entrepreneur and cryptocurrency supporter Nitin Sharma said the Supreme Court’s ruling was “historic.”
“Historic day for Crypto in India. We can now innovate. The entire country can participate in the Blockchain revolution,” said Nischal Shetty at the time, the founder and CEO of Bitcoin exchange platform WazirX.
India plans to introduce a new proposal to prohibit the use of cryptocurrencies in the country and provide a framework for launching a national digital currency, just one year after the Indian Supreme Court ruled against similar legislation.
About the Author
Avi Ben Ezra is the Chief Technology Officer (CTO) and Cofounder of SnatchBot and SnatchApp (Snatch Group Limited). He leads the Group’s long-term technology vision and is responsible for running all facets of the tech business which includes being the architect of the platforms and UI interfaces.