The Centre government has proposed to introduce Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 in the coming winter session. This is among the 26 legislations tabled for this winter session starting November 29. Speculations are high that this bill aims at banning cryptocurrency in India.
“The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, which will be introduced in the next session of Parliament seeks to “prohibit all private cryptocurrencies in India” but “allows for certain exceptions” to promote the underlying technology and its uses,” stated the Lok Sabha Bulletin notification. The public will get a clear picture after more details are aired.
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Will Cryptocurrency Be Banned In India?
The biggest question that is haunting the investors is will India ban cryptocurrency. The news about introducing cryptocurrency regulation bills has already affected crypto markets. Huge panic selling is being witnessed right from Tuesday evening.
The bulletin has not shared many details about the cryptocurrency legislation which has made everyone anxious about their investments in crypto markets.
But as per the little description mentioned in the bulletin, the Centre government is likely to ban private cryptocurrency in India with some exceptions to pave the way for digital money controlled by the central bank Reserve Bank of India.
The bill aims at creating a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India (RBI).
Market Impact After Crypto Ban In India News
The news about the cryptocurrency ban in India led to a noticeable drop in the value of digital currencies. Bitcoin fell more than 13% on the Indian exchange site WazirX, while Shiba Inu and Dogecoin both dropped more than 15%.
The price of the world’s biggest virtual currency Bitcoin crashed to as low as ₹33,50,000 on WazirX from the high of ₹46,35,371 after the news about the bill broke. The coin was trading at around ₹37,80,000 on Tuesday morning in India compared with $56,638.67 or ₹42,15,928 in global markets, as per Coingecko, a digital currency price and information data platform.
As per the Chainalysis research, the crypto market in India grew like anything since Supreme Court removed the crypto ban last year. It reported a boom of 600 percent over the past 12 months.
As per the Blockchain and Crypto Assets Council (BACC), approximately 15 to 20 million people in India own cryptocurrency. More people invested in crypto after the month of March.
What is Private Cryptocurrency?
Now after government mentioned about the private cryptocurrencies, you all might be wondering what is private cryptocurrency in India, what does private private cryptocurrency mean, what are private cryptocurrencies, and how many private cryptocurrencies are there. All these questions are quite obvious.
In simple words, private cryptocurrency offers anonymous blockchain transactions with no transaction history and maintains anonymity. It allows the users a higher level of privacy by obscuring the origin and destination of transactions.
Private cryptocurrencies use some cryptographic measures to mask the users’ information. This may include hiding real wallet balance, transactions, and address. It also includes mixing multiple transactions with each other to elude chain analysis.
They have public open ledgers too but transaction details will be blurred to maintain the privacy and anonymity of the users. The issue with private cryptocurrency is that it is hard to trace these transactions.
Some of the private cryptocurrency examples include
Difference Between Private and Public Cryptocurrencies
What is public cryptocurrency? What is the difference between public and private cryptocurrencies?
The biggest difference between public and private cryptocurrencies is the privacy they offer. There is more transparency in the public cryptocurrency market. These are built on a public blockchain, making transactions traceable and also providing users be anonymous. But it offers anonymity to a certain level only. Your wallet address can be configured and transactions too.
Some of the public cryptocurrency examples include
- Shiba Inu
Will India Ban Cryptocurrency?
The mind of every crypto investor is filled with questions like will all cryptocurrencies be banned in India, what will happen with their money after the crypto ban, and much more. These questions are making them anxious. They are confused whether they should also join the crowd which is panic selling or should wait for the details about Cryptocurrency and Regulation of Official Digital Currency Bill, 2021.
But as far as the legislation description says and as per the industry experts too, there will not be a blanket ban on cryptocurrency in India. To clarify, the government is only planning to regulate the virtual currency market and will likely ban private cryptocurrency.
Why Is the Government Planning To Ban Private Cryptocurrencies in India?
As private currency offers more privacy and anonymity to the user, the transactions are untraceable. This private virtual currency is already on the target of many countries and many exchanges have delisted them.
The reason why private cryptocurrencies are on everyone’s radar is they have the huge capacity of promoting money laundering and terror funding.
Govt To Allow Exit Window For Crypto Investors
The crypto ban bill news has created unrest in the Indian crypto market, making panic selling very obvious. But there is no need to panic. Wait for more details. As per the sources, the government is going to give time to crypto investors to make an exit.
The investors will be provided with a time frame who have invested in cryptocurrency to withdraw their investments. Therefore, the ban will only be activated after that exit window.
What Is Cryptocurrency And How Does It Work?
Cryptocurrency is a decentralized digital currency used to buy goods and services. Based on blockchain technology, it uses an online ledger and strong cryptography to keep the transactions safe and secure. Unlike your traditional currency, it doesn’t have any physical embodiment.
Crypto is a process of encryption and decryption to secure communication. There is no third party (banks) involved and transactions are transparent. There are more than 5,000 cryptocurrencies available in the market.
How does cryptocurrency work? Does Cryptocurrency give you real money?
Cryptocurrencies are based on distributed online ledgers. Blockchain technology helps to have multiple ledgers which are connected to a network. All the transactions are recorded and cross-checked across the ledgers. This eliminates the chances of bogus entry or miscalculation and if entries don’t match, other ledgers get cancelled.
Therefore, there is no need for third-party monitoring as a network of computers connected to the blockchain does everything on its own. Bitcoin, which was the first cryptocurrency, has led to the origin of the term ‘decentralized finance” or ‘DeFi’.
Difference Between Digital Currency and Cryptocurrency
Digital Currency — Digital currency is the balance or a record stored in a distributed database on the internet.
- It is basically the digital representation of the physical currency of a country. We can make the transactions digitally.
- This is centralized as the transactions taking place are controlled by servers belonging to a group of people in such a system.
- It will require identification, presenting the scanned identity papers to the system, and waiting for their verification.
- Not transparent as we cannot see information about other people’s transactions in their wallet address.
- Transaction issues like transaction cancelling or freezing the wallet are managed by the central authority.
Cryptocurrency — Cryptocurrency is a digital currency used to buy goods and services.
- It uses blockchain technology.
- It is decentralized.
- Not much identification, scanning, and verification. It helps you maintain anonymity but up to a certain level only.
- It is transparent as the transaction of the users is entered into the public blockchain.
- Transaction management is done by the crypto community itself.
How Virtual Currency is Different From Cryptocurrency and Digital Currency?
If you think all these currencies are the same, then let us correct you here. There are a lot of differences between virtual currency, digital currency, and cryptocurrency. The aforementioned details are enough to explain cryptocurrency and digital currency. Let’s get to know what virtual currency is.
Virtual currency is neither issued by the government nor regulated by it. They can only be used digitally and don’t hold any real value. However, this currency can be used in apps or games. Most importantly, they cannot be converted to fiat currency (digital or physical form).
To sum up, we hope that you might have gotten enough clarity about whether the Indian government is banning cryptocurrency. We have tried our best to help all you need to know about cryptocurrency, how it works, and how it is different from other currencies.
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This article is written by Varsha. You can reach out to the author via email at firstname.lastname@example.org.