New Delhi, India: The Central government said earlier this week that it will introduce a measure to ban all private cryptocurrencies in the forthcoming winter session of Parliament, a move that has alarmed crypto investors in the country. The government has disclosed plans to launch an official digital currency in conjunction with the move to ban a few digital coins. The Reserve Bank of India (RBI) is scheduled to launch the digital coin, which would be governed by the central bank.
The Cryptocurrency and Regulation of Official Digital Currency Bill of 2021 seeks to regulate cryptocurrencies in the country. The law will also serve as the foundation for the introduction of digital currency issued by the Reserve Bank of India in India.
“The Bill also seeks to prohibit all private cryptocurrencies in India,” according to the bulletin listing on the Lok Sabha’s website. “However, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.”
The RBI is anticipated to create digital currency based on the blockchain technology that underpins cryptocurrency. Other applications of blockchain technology will be promoted by the government.
The bulletin listing stated, “To build a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India.” However, the question of how RBI’s digital money will differ from popular coins like Bitcoin or Ethereum remains unanswered.
To keep things simple, we’ll need to know that the RBI will launch a central bank digital currency (CBDC) that isn’t quite a cryptocurrency. The primary distinction between a CBDC and a cryptocurrency is that the former is regulated by governments, whereas the latter is decentralised.
CBDCs are also far more stable than cryptocurrencies. India, on the other hand, will not be the first country to introduce its own digital currency. Singapore, for example, is working on Project Ubin, Canada on Project Jasper, the United Kingdom on cross-border interbank payment and settlements, and France on Digital Euro.
The Reserve Bank of India clarified what CBDC is earlier this year. “CBDC is a digital or virtual money, but it is not comparable to the private virtual currencies that have proliferated in recent years.” Private virtual currencies are diametrically opposed to the traditional understanding of money. They are not commodities or claims on commodities because they have no inherent worth; some claims that they are similar to gold appear to be purely speculative. They usually do not represent any person’s debt or liabilities, at least not the most popular ones these days. ISSUER does not exist. They are not money (definitely not CURRENCY) in the traditional sense,” the central bank stated.