Indian Central Bank plans an upcoming Bill: Where are digital currencies headed?

The uncertain legal status about cryptocurrencies is discouraging Indian investors holding around a total of $1.5 billion in digital currencies. The government is planning a law to ban private digital currencies, and proposing a digital currency backed by the Reserve Bank of India.

Indian Central Bank plans an upcoming Bill: Where are digital currencies headed?

As existing investors could get breathing space to exit their holdings in the event of a ban on any kind of dealing such as trading, mining and holding cryptos, the proposed legal structure may seek declarations of holdings and transactions retrospectively from investors and traders.

Besides, RBI has indicated it’s “very much in the game”, and getting ready to develop and launch its own digital currency. “Central bank digital currency is a work in progress. The RBI team is working on it, technology side and procedural side” Governor Shaktikanta Das said recently.

The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, which will prohibit all private cryptocurrencies and lay down the regulatory framework for the launch of an “official digital currency”, was to be introduced in latest Parliament’s Budget session, but it was held up due to the government continues discussions with stakeholders.

“We have held extensive deliberations. There is the expert panel’s report, followed by inter-ministerial discussions, meetings by the Cabinet Secretary and submissions by various people concerned. The Bill will take all of that into account,” a senior government official said.

A 3-6 month exit period prior to banning the dealing of cryptos has been already discussed in inter-ministerial discussions. However, the high-power inter-ministerial committee previously suggested putting the ban on all private cryptocurrencies. The final draft Bill is yet to go to the Cabinet, a source said.

A recent survey of central banks conducted by the Bank for International Settlements found that almost 80% of the 66 responding central banks have started exploration and development of CBDC projects meanwhile studying its potential benefits and implications for the country’s economy.