In the wake of the Union government’s announcement yesterday, on November 23, that it will introduce a Bill in the upcoming winter session of the Parliament, the market prices of many cryptocurrencies crashed by at least 15 per cent in Indian exchanges.
In its list of legislative business for the winter session that commences on November 29, a bulletin issued by the Lok Sabha mentioned a proposed legislation titled ‘Cryptocurrency and Regulation of Official Digital Currency Bill 2021’. The mere mention of this Bill in Lok Sabha’s list created ripples of panic across the cryptocurrency market in the country, which has so far enjoyed the sheer absence of laws in the Indian Constitution which regulate the digital ‘crypto’ currencies.
“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,” stated the proposed Bill in the Lok Sabha bulletin.
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At 11:45 PM on November 23, all major cryptocurrencies saw a declne by around 15 per cent and more, with Bitcoin down by around 17 percent, Ethereum fell by 15 per cent, and Tether down by almost 18 per cent.
What is cryptocurrency?
A cryptocurrency is a digital currency and doesn’t exist in the physical form as such. Each cryptocurrency is technically a highly-complex coded sequence which has a monetary value assigned to it.
The most famous cryptocurrencies include Bitcoin, Ethereum, Cardano, Polkadot, Solana amongst others.
A single unit of a cryptocurrency is monetarily far greater than the value of a fiat currency (like Rupee, Dollar, Rouble). A Bitcoin is worth around Rs 4 million in the Indian cryptocurrency exchanges.
But it doesn’t mean that a buyer or an investor of cryptocurrencies has to have four million rupees to get a bitcoin as these cryptocurrencies can be bought in fractions as well.
Why does the Indian government want to regulate it?
The Reserve Bank of India (RBI), which regulates all monetary exchanges in the country, has been wanting to ban cryptocurrency exchange in India since 2018. In April 2018, the RBI banned cryptocurrency but on March 4, 2020 the Supreme Court quashed the ban citing the absence of laws to deem cryptocurrency illegal.
“When the central bank says that we have serious concerns from the point of view of macroeconomic and financial stability, there are far deeper issues involved. I’m yet to see serious, well-informed discussions in the public space on these issues,” RBI Governor Shaktikanta Das was quoted.
