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What is “Cryptocurrency and Regulation of Official Digital Currency Bill, 2021”?



Digital Currency Bill

The Indian government has finally dropped the hanging sword of cryptocurrency bills on the crypto traders. The list of bills to be discussed in the winter session of parliament this year has one bill specifically for cryptocurrencies and their regulations. India stands second in the cryptocurrencies adoption rate in 2020, and this also prompted the government to look into this matter and propose a bill to regulate it. There is no official data, but reports suggest that the number of cryptocurrency investors in India may range from 1.5 crores to 2 crores, with investments of around 40 crores.

The anticipation started last year when the government came up with a similar bill. Still, they put that on hold and made a committee to provide recommendations with several talks with experts and the stakeholders. 

This year their stance hasn’t changed much on the topic. The one silver lining in the bill is that it allows some exceptions to let the underlying technology of cryptocurrencies, that is, blockchain, flourish. Still, the proposed bill; hasn’t provided any defined list of exceptions it will provide.

Let’s understand what “Cryptocurrency and Regulation of Official Digital Currency Bill, 2021” is.

The official government sources say that the upcoming bill is aiming to ban all “private cryptocurrencies,” with some exceptions. The government addresses came out as being against cryptocurrencies, suggesting the possibility of a blanket ban. A few instances were when the officials also considered cryptocurrencies an asset, but this upcoming bill is not very much different from the previous one.

The government is yet to define “private cryptocurrencies.” By the general definition, most cryptocurrency transactions can be traced back to the wallet address, making them public transactions by technical description. Some of the cryptocurrencies also offer anonymous blockchain transactions, where the coin hides the wallet’s address and balance to make it anonymous. These are called private cryptocurrencies.

Some experts say that if the government plans to ban private companies’ private cryptocurrencies, then it is a good move as these currencies have been subjected to a couple of numerous scams in the past.

Now here comes the catch, as the government has not given any exact definition. They can make all the cryptocurrencies that are not government-issued come under the umbrella of private cryptocurrencies. This means major coins such as Bitcoin and Ethereum may also face a ban because any single individual or a company controls them, but they still are not issued by the government.

One point that this bill makes clear is that cryptocurrencies may never become legal tender in India. A lot of cryptocurrencies enthusiasts always praise the open nature and decentralized nature of cryptocurrencies. They see an immense possibility of replacing the existing fiat currency with this new decentralized cryptocurrency. El Salvador has already accepted Bitcoin as legal tender, but you won’t be seeing such a trend in India anywhere in the near future.

The RBI has been critical of cryptocurrencies and takes them as a threat to the economy. The RBI is surely bringing its digital currency. More details regarding this new digital currency are pending. This bill is also reflecting a possible new digital currency from the RBI.

The proposed ban on cryptocurrencies will also promote the RBI’s new digital currency. Some experts believe that the government may allow transactions in cryptocurrencies via platforms officially recognized by the government. There may come a new regulatory body, or the new transactions take place under the regulations of RBI.

There have been multiple reports stating that the government may not ban cryptocurrencies and only prohibit them. But you can still trade your cryptocurrencies for other forms of assets at to secure what you have invested.

This is still a bill, which means it will be presented in the upcoming session of the parliament and discussed upon. The final law can have any face to it. It can remain the same as the proposed bill or entirely different. At this juncture, all the investors should stay calm and let the future unfold before them, then only decide what they want to do with their investments.

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