According to a senior Indian government official, the Indian government wishes to introduce a bill to ban cryptocurrencies, including Bitcoin, in the country.
If so, it would not be the first time that steps had been taken in India to deal with cryptocurrency. In 2018, the Reserve Bank of India attempted to ban banks from dealing in cryptocurrency. However, in 2020 that ban was reviewed, and overturned, by the Indian Supreme Court.
India has an active cryptocurrency market, with more than 10 million crypto users and more than 3,000 people employed in the industry. And, in an effort to address some of the issues which may be concerning the Indian government in relation to crypto, crypto exchanges in India have put together a package of proposals for a regulatory regime, which they will present to the government and central bank.
Why is this important? If a ban on crypto is introduced, it could potentially have a similar effect to that seen in 2018, when the Reserve Bank of India introduced its measures. At that time, crypto exchanges were badly affected, with their trading volumes down by almost 100%. It could also mean, for example, that blockchain experts are tempted to move out of the country.
Nobody really knows how this will play out. One theory is that the government will possibly ban payments in cryptocurrency but allow it to be retained as an investment vehicle. The real issue here appears to be that India wants to retain control over its currency, the rupee, which may be digitalised at some time in the future. The introduction of a digital currency seems inevitable, not just in India, but worldwide, with the head of the European Central Bank, Christine Lagard, recently saying  that the introduction of a digital euro should happen in the next four years.
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