Government to Create Official Digital Currency

The Indian government is poised to introduce a new law regarding cryptocurrencies and establish an official digital currency. This proposed legislation aims to ban private cryptocurrencies while laying the groundwork for a central bank digital currency.

Banning Private Cryptocurrencies

According to the parliamentary agenda, the new law will ban all private cryptocurrencies like Bitcoin, Ethereum, and others. Exceptions may be made to promote blockchain technology for select uses. The law builds on a 2019 proposal to criminalize activities involving private cryptocurrencies. However, India has stopped short of an outright ban so far.

Official Digital Currency Plans

In addition to restricting cryptocurrencies, the law seeks to establish a framework for an official digital currency from the Reserve Bank of India (RBI). The RBI would introduce this centralized virtual currency synonymous with banknotes. Many countries are exploring similar central bank digital currencies.

Previous Attempts at Bans

India has long expressed skepticism of cryptocurrencies. In 2018, the RBI prohibited banks from dealing with crypto-related businesses, but the Supreme Court overturned this ban in 2020. The new law indicates the government still wishes to impose strict limitations.

Global Context

While India considers a ban, most countries are looking to regulate rather than prohibit cryptocurrencies. The Indian law would make it an outlier. However, central bank digital currencies are gaining traction globally.