India announces bill to ban cryptocurrencies

Nov 24, 2021: In a shocking announcement late Tuesday, Parliament said the Indian government would introduce a bill to ban private cryptocurrencies and create a framework for central bank-backed digital money.

The Lok Sabha said the proposed bill “seeks to ban all private cryptocurrencies in India”, and Prime Minister Narendra Modi had warned last week that the bitcoin was a threat to the younger generation and if passed. “It can ruin our youth, ” warned the Indian PM.

This is the latest move by a major emerging economy since China outlawed all corrupt currency transactions in September.

India’s cryptocurrency market has boomed since the country’s Supreme Court overturned a previous ban in April last year, which has grown by more than 600 per cent over the previous year.

Asia’s third-largest economy is estimated to have between 15 and 100 million people owning cryptocurrencies, with billions of dollars in total assets. Their investment will now face an uncertain future. India’s central bank announced in June that it was working to introduce its digital currency by the end of the year, while warning that it had “serious concerns” about private cryptocurrencies such as bitcoins, etherium and others.

The bill, which comes before the new legislature, will allow for some exceptions to the development of cryptocurrency technology, according to Parliament’s forthcoming business bulletin, but no further details on the proposed legislation have been released.

The market price of Bitcoin appeared unaffected and was up 1.67% in Tuesday’s trade.

But the phrasing of the proposed bill sent alarm bells ringing among local traders and enthusiasts.

Cryptocurrencies have been under scrutiny by Indian regulators since first entering the local market in 2013.

A surge in fraudulent crypto transactions following the Modi government’s demonetisation of nearly all banknotes in 2016 led to the country´s central bank banning crypto transactions in April 2018.

The Supreme Court lifted the ban two years later and investments have surged in the time since.

Analysts say regulation would be central to addressing security risks, with crypto exchanges increasingly targeted by cyber criminals as virtual currency prices soar.

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