India to have its own official digital coin; Plans to ban private cryptocurrencies

By Amirtha P S, Desk Reporter
  • Follow author on
Representational Image

India plans to roll out new law to ban private cryptocurrencies like bitcoin and map out a new framework for an official digital currency to be issued by the central bank, according to a legislative agenda listed by the government.

The new law will bring a facilitative framework for the development of the official digital currency to be issued by the Reserve Bank of India (RBI), said the agenda, issued on the lower house website.

The legislation, listed for debate in the current parliamentary session, plans to prohibit all private cryptocurrencies in the country, but it gives certain exceptions to enhance the basic technology of cryptocurrency and its uses.

By mid-2019, an Indian government panel suggested banning all private cryptocurrencies in the country with a jail term of up to 10 years and huge fines for anyone trading digital currencies.

However, the panel has asked the government to think about launching an official government-backed digital currency in India, to be used like banknotes, through the Reserve Bank of India. In April 2018, the RBI ordered financial institutions to detach ties with individuals or businesses dealing in cryptocurrencies like bitcoin within three months.

Even though in March 2020, India’s Supreme Court enabled banks to handle cryptocurrency transactions from exchanges and traders, overturning a central bank ban had dealt the thriving industry a major blow.

Governments around the world have been searching for ways to regulate cryptocurrencies but no major economy has taken the drastic step of banning them, however, concern has been raised about the misuse of consumer data and its possible impact on the financial system.