Indian Govt to Propose a New Cryptocurrency Backed by Its Central Bank

The lower house of the Indian parliament is set to begin its winter session of 2021 next week, with about 26 proposed bills coming from the government.

One among them is the “Cryptocurrency and Regulation of Official Digital Currency Bill”, which states introducing a new cryptocurrency backed by RBI, and also banning all the private cryptocurrencies in India. While the bill is yet to pass, this news spurred panic selling among retail investors.

India’s State-Backed Cryptocurrency

Even with 15-20 million active cryptocurrency investors in India, the nation is yet to come up with a proper regulation for trading and mining virtual coins. There have been a lot of rumors suggesting the regulation of them, with heavy tax rates to discourage the public from participating.

At the same time, local news publishers hinted a blanket ban again, after disputing the 2018’s RBI ban. Now, an agenda stating “Cryptocurrency and Regulation of Official Digital Currency Bill” came out, which the government is proposing in Lok Sabha next week, in the parliament winter session of 2021.

This if assented, can bring a Central Bank Digital Currency (CBDC) backed by the nation’s banking regulator – the Reserve Bank of India soon. This is similar to the Chinese digital Yuan, announced earlier this year. Alongside, the bill description stated banning all the private cryptocurrencies in India.

What’s termed as private isn’t clear yet, these could be the more secure coins like Monero, Dash, etc, which offer better privacy to users than others. So cryptocurrencies like Bitcoin and Ethereum may still be traded since they have public blockchains and aren’t termed as private yet.

Whatever, India may still have a tough time in regulating cryptocurrencies, as investors can get sneaky in case of a blanket ban again.  Although, just a mention in the agenda has triggered a selling spree among retail investors, who plunged the prices of major cryptocurrencies by at least 8-10% on Tuesday night.

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