A day after the central government listed the cryptocurrency bill for introduction in the Lok Sabha’s winter session, cryptocurrency prices crashed and investors feared what would happen if the bill is passed in the current form.
Online broking platform Zerodha’s founder Nikhil Kamath expressed his concern via a tweet: “Is the Indian govt banning cryptos? What happens to everything in circulation already?”
His concerns are not misplaced. Industry estimates suggest there are 15 million to 20 million crypto investors in India, with total crypto holdings of around Rs 40,000 crore or $5.39 billion.
The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 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 government has said that it will look to create a framework for an “official” digital currency, which will be issued by the Reserve Bank of India.
The news comes a week after the country held its first parliamentary panel discussion on cryptocurrency. During the meet, a consensus was reached on the need to regulate it amid aggressive advertising by major crypto platforms in the country promising easy returns on investments, which could be misleading and risky for investors.
On November 16, the Parliamentary Standing Committee on Finance, chaired by Bharatiya Janata Party leader and former union minister Jayant Sinha, had met representatives of the Blockchain and Crypto Assets Council (BACC), crypto exchanges, and industry associations, among other stakeholders.
At the Parliamentary Standing Committee meeting, all parties concluded that cryptocurrency cannot be stopped, but it must be regulated. However, there was no clarity from industry associations and stakeholders on who should be the regulator or what will happen to the cryptocurrency already in circulation.
One of the primary concerns was about the security of investors’ money. One parliamentarian also expressed concern over full-page crypto advertisements in national dailies.
Lawmakers have also expressed concerns around the potential misuse of crypto trading vehicles for money laundering and financing terrorism efforts.
Experts, on the other hand, opined that cryptocurrency is a sort of investors’ democracy.
While China has banned cryptocurrency to promote the government’s digital currency, El Salvador is the only country to have made it legal tender.
The winter session of the Parliament is scheduled to start from November 29 and conclude on December 23.
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