INDIA PLANS TO INTRODUCE NEW LAW TO BAN BITCOIN, OTHER PRIVATE CRYPTOCURRENCIES

On 29 January 2021, in circular number 2,022, in the ‘E’ new bills section under Legislative business, the Indian government proposed a new bill. The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, as named by the government, will “create a facilitative framework for creating the official digital currency to be issued by the Reserve Bank of India.” The Bill also aims to outlaw all private cryptocurrencies in India but provides some provisions to support and use the underlying cryptocurrency technologies.

The agenda read that it will “prohibit all private cryptocurrencies in India; however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses,” the agenda said.

The panel also asked the government to consider the launch of an official government-backed digital currency in India to function like banknotes through the Reserve Bank of India (RBI).

The issue is expected to be taken up in the fifth session of the 17th Lok Sabha, 2021.

However, in 2020, the Supreme Court allowed banks to control exchanges and traders’ cryptocurrency transactions, overturning a central bank prohibition on such transactions that had come as a significant blow to the booming industry. In April 2018, the RBI directed financial institutions to cut ties with individuals or firms trading with virtual currencies such as Bitcoin within three months. The commission further proposed a prison sentence of up to 10 years and substantial penalties for those trading with digital currency.

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