Government to Create Official Digital Currency

India is looking to come up with a new law to ban private cryptocurrencies like Bitcoin. The government is also planning to prepare a framework for official central bank digital currency.

Key Points

• As per the agenda published on the website of Lower House, the new law will put up a framework for the creation of official digital currency by the Reserve Bank of India (RBI).
• The law will be up for debate in the present parliamentary session as per the agenda.
• The law also seeks to ban all private cryptocurrencies in the country. However, there will be some exceptions that will allow promoting the cryptocurrency technology and its uses.
• In the year 2019, an Indian government panel recommended banning all private cryptocurrencies and also called for imprisonment up to 10 years and hefty fines for anyone dealing in digital currencies.
• However, the panel had asked to launch a government-backed official digital currency in the country to act like banknotes, through the Central Bank.
• The Reserve Bank of India had then ordered financial institutions to cut off all ties businesses or individuals related to cryptocurrencies like Bitcoin within 3 months.
• However, the Supreme Court of India in March 2020 had overturned the order of the central bank and allowed banks to handle cryptocurrency transactions from traders and exchanges.

Various Governments across the world are looking into ways for regulating cryptocurrencies but no economy has banned them completely. However, a call for Central bank-backed digital currency is now being considered by many economies.