Data currently suggests that as many as 20 million people in India currently invest in cryptocurrencies — and the news has sparked panic on local exchanges.
India is planning to impose a ban on "all private cryptocurrencies" — sparking fears of a return to strict regulations.
Back in 2018, the country's central bank stopped financial institutions from holding digital assets or processing crypto transactions — measures that forced a number of exchanges to close their doors for good.
Those measures were ultimately struck down by India's Supreme Court in 2020 — and during the coronavirus pandemic, the crypto sector had started to flourish once again. In the run-up to Diwali, several top Bollywood stars had even appeared in adverts promoting local exchanges.
Data currently suggests that as many as 20 million people in India currently invest in cryptocurrencies.
Dubbed the Cryptocurrency and Regulation of Official Digital Currency Bill 2021, the measures set to be introduced in parliament will undoubtedly introduce restrictions. However, there's some confusion as to what a "private cryptocurrency" actually is.
This could apply to privacy coins such as Monero or Zcash, which aim to obfuscate details about senders and recipients — as well as the value of transactions. But some fear that the language in this bill actually applies to all digital assets, including Bitcoin and Ether.
Listen to the CoinMarketRecap podcast on Apple Podcasts, Spotify and Google Podcasts
CBDC on the Way
Elsewhere in the bill, Narendra Modi's government plans to introduce "a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India" — indicating that officials want to impose restrictions on every cryptocurrency apart from their own.
Rohit Kundliwal, a marketing executive at the Indian exchange WazirX, has tried to calm concerned investors — stressing that crypto can't be banned, only regulated. He also pointed to repeated statements from top politicians that a blanket ban would not be imposed.
Some Indian MPs fear that these restrictions could dampen a thriving fintech sector that could generate employment and all-important tax revenues — putting the country at a disadvantage in an increasingly digital economy.
