The central government announced earlier this week that it intends to pass legislation restricting the use of private cryptocurrencies. This is despite the fact that, as RBI Governor Shaktikanta Das has emphasized multiple times, there is growing concern about the potential harm that cryptocurrencies could cause to the country’s macroeconomic and financial stability.
The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, aims to make the usage of all private cryptocurrencies illegal. As a result, it calls for the creation of an official digital currency issued by the Reserve Bank of India. The government’s move comes only days after Prime Minister Narendra Modi presided over a review meeting on the growing threat presented by cryptocurrencies, which was thoroughly probed.
According to sources, India’s much-anticipated cryptocurrency Bill would likely limit all private cryptocurrencies, however, this will not be a blanket restriction. The Centre intends to introduce it during Parliament’s upcoming winter session.
Furthermore, the bill wants to criminalize all private cryptocurrencies in India. “However, it allows specific exceptions to encourage the underlying technology of cryptocurrencies and their applications,” according to a Lok Sabha bulletin issued on Tuesday.
According to the bulletin, it also sought to “create a conducive environment for the growth of the Reserve Bank of India’s official digital currency” and “allow for some exceptions to encourage the underlying technology of cryptocurrencies and their use.”
This asks the question, “What are private cryptocurrencies?”
It’s worth emphasizing that the government has yet to define “private cryptocurrency,” and everything related to the anticipated “regulation” is still up in the air. However, indications indicate that Bitcoin, Ether, and other digital currencies based on blockchain technology will not be prohibited.
The most popular cryptocurrency coins, such as Bitcoin, Ether, Dogecoin, and Shiba Inu, are accessible to the whole public, which means that all transactions are entirely transparent. Although these cryptocurrencies allow users to operate anonymously, blockchain transactions are visible to anybody with access to the relevant blockchain.
These cryptocurrencies were created in such a way that their transactions may be tracked and correlated. Those working with sensitive data, on the other hand, may wish to join a private blockchain such as Monero, Particl, Dash, or ZCash. These sites encrypt user data and make transactions untraceable.