Crypto investors in the country should remain calm, do their own research before arriving at a rushed conclusion. Investors should also wait for a government statement on this matter and not rely too much on information from secondary sources.
A large number of crypto users on Indian exchanges resorted to panic selling amid rumours of a proposed ban on cryptocurrencies through the upcoming crypto bill in Parliament. However, experts suggest that crypto investors should not resort to panic selling as nothing is known about the content of the proposed bill yet. They further say that Crypto investors in the country should remain calm, do their own research before arriving at a rushed conclusion. Investors should also wait for a government statement on this matter and not rely too much on information from secondary sources.
A bill to regulate cryptocurrencies in India is slated to be introduced in Parliament in the upcoming Winter Session. The bill is titled “The Cryptocurrency and Regulation of Official Digital Currency Bill 2021”.
Interestingly, there is no change in the description of the bill listed for introduction in the Parliament previously. It continues to state: “To create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India. The Bill also seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses”
Considering the number of public discussions over crypto in the last 5-6 months and the Government’s statements on the need to regulate and not ban crypto, experts are surprised that there is no change in the description of the proposed bill to be introduced in the Parliament. Some even believe that it may be a clerical error as recently the Government has been of the view of regulating, not banning cryptocurrencies in India.
The description mentioned in the Lok Sabha Bulletin itself has many doubtful wordings. For instance, it mentions that the “Bill also seeks to prohibit all private cryptocurrencies in India.”
What is private cryptocurrency?
The use of the word “private” in the above description has apparently led to panic selling since yesterday. As there is a view that the ban on “private” cryptocurrencies would mean a ban on all types of crypto assets not approved or backed by the Government. There is another view, circulated widely on social media, that since popular coins like Bitcoin, Ethereum etc. are traded publicly and their transactions can be tracked, they may not be banned.
However, experts say that the government should clarify what it means by using “private cryptocurrencies.” Sharat Chandra, Blockchain and Emerging Tech Evangelist told FE Online, “That’s where the government needs to come clean. How are they defining cryptocurrencies? If I am tokenizing a piece of a real-world asset, say real-estate, or shares for that matter how will this crypto token be treated? Ideally an assessment framework should be devised to classify tokens depending upon their utility and use cases. There is no one size fits all approach.”
Bitinning founder Kashif Raza said that there is nothing like private cryptocurrencies. Instead, there are some privacy coins like Monero. “But these privacy coins are not very popular among investors. As far as popular cryptocurrencies like Bitcoin are concerned, transactions on them can be tracked,” Raza told FE Online.
Attempts at crypto prohibition have not succeeded in other countries. In fact, no country in the world has completely banned cryptocurrencies. Even those who have tried, have failed.
Raza fears that if the Government of India decided a complete ban on cryptocurrencies, then it may lead to black marketing where crypto investors would end up losing more money.
The description of the Bill also mentions a scope for certain exemptions. Raza said if the government goes for a complete ban on cryptocurrencies, then exceptions for holding or using certain coins may be provided for educational purposes.
Chandra said stablecoins can be one exception as there is an established case of using stablecoins for faster payment settlements. Visa and Mastercard are already using stablecoins on their payment networks
Shivam Thakral, CEO of BuyUcoin, said, “I think popular crypto-assets like Bitcoin, Ethereum will be pre-approved by the regulators for getting listed on the exchange.”