The Indian government will propose legislation to outlaw private cryptocurrencies and establish a framework for a central bank-backed digital currency, the country’s parliament announced late Tuesday.
The proposed bill “seeks to prohibit all private cryptocurrencies in India”, the Lok Sabha said, and comes after Prime Minister Narendra Modi warned last week that Bitcoin presents a risk to younger generations and could “spoil our youth” if it ends up “in the wrong hands”.
It is the latest such measure by a major rising country, after China’s declaration in September that all cryptocurrency transactions were prohibited.
According to Chainalysis analysis, India’s crypto industry has grown more than 600% in the past year since the country’s Supreme Court overturned a prior prohibition in April last year. It is believed that between 15 and 100 million people in Asia’s third-largest economy possess cryptocurrencies, with total holdings in the billions of dollars.
Their investments now face a bleak future.
In June, India’s central bank said that it is preparing to launch its own digital currency by the end of the year, while also expressing “serious concerns” about private cryptocurrencies such as Bitcoin, Ethereum, and others.
According to the parliament’s upcoming business bulletin, the bill, which will appear before the new parliamentary session, will allow for some exclusions to encourage bitcoin technology, but no other information about the proposed law was disclosed.
Bitcoin’s market price looked unchanged, rising 1.67 percent in Tuesday’s session.
However, the draught bill’s language raised concerns among local traders and fans.
“The wording has created a panic,” Kashif Raza, creator of crypto-education platform Bitinning, said, adding that the sector anticipated the government to take a more favourable stance following recent meetings with the business.
“Obviously there will be a shutter-down on the industry,” he continued. “The industry will die in its natural way. Intellectual capital will move away, investors will face losses.”
Since its introduction into the Indian market in 2013, cryptocurrencies have been scrutinised by Indian regulators.
Following the Modi government’s elimination of almost all banknotes in 2016, a rise in fraudulent crypto transactions prompted the country’s central bank to prohibit crypto transactions in April 2018.
The restriction was repealed by the Supreme Court two years later, and investments have increased since then.
In recent months, Indians have been besieged with ads for CoinSwitchKuber, CoinDCX, and other home-grown crypto exchanges on television channels, internet streaming platforms, and social media.
According to TAM Sports data, these platforms spent more than 500 million rupees ($6.7 million) on advertising spots during the recently ended T20 World Cup, with viewers exposed to an average of 51 bitcoin adverts each match.
Analysts believe that legislation will be critical in addressing security threats, since crypto exchanges are increasingly being targeted by cyber thieves as virtual currency pContact:
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