- India could be on the verge of banning all cryptocurrency-related activity
- Bloomberg cites a senior government official as saying that a total ban is imminent
- India has had a fractious relationship with cryptocurrencies in the past, with the central bank trying to ban it
India will issue a blanket ban on all cryptocurrency investment but will give existing investors time to get out, according to Bloomberg. The outlet cites a senior Finance Ministry official as saying that, after years of back and forth on the matter, parliament will vote to ban “its usage in all forms”, including private trading and trading through exchanges. However, existing investors will be given time to exit their positions, after which time crypto exchanges in the country will be shuttered and Indian nationals banned from using foreign exchanges.
India Has Fractious Cryptocurrency Relationship
India’s relationship with cryptocurrency has been a fractious one. The Reserve Bank of India (RBI) first warned about cryptocurrencies back in 2013, since when it has taken steps to ban them but always pulled back at the last minute, causing huge confusion in the process. In 2018 the government set up a series of interdisciplinary meetings on the matter in order to try and get a resolution on the matter in place, but nothing ever came of it.
Matters got more serious in August last year when the RBI was said to be considering approaching the government to impose a ban on all cryptocurrency investing and trading, and this seems to be exactly what has happened.
The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, has been introduced into the ongoing Budget session of Parliament, with its stated purpose being to “create a facilitative framework for creation of the official digital currency to be issued by the RBI,” although it carries with it a much clearer and more troubling aim:
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.
Indian Crypto Sector Faces Tougher Foe
The Indian cryptocurrency industry will understandably be up in arms about this, with any ruling along the published lines ultimately forcing them to shut up shop. They have successfully challenged previous crypto bans by the RBI, which explains why the central bank went to the government for help. No matter what support the crypto community in India could rustle up, any challenge will likely have to come from inside the political system rather than through the courts, making it much harder to achieve.