It may be premature for cryptocurrency players in India to be concerned about a prospective ban on virtual tokens, as they are right now.
Since yesterday, the prices of key cryptocurrencies have plummeted by 17 percent for bitcoin, 15% for ethereum, and nearly 18 percent for tether (Nov. 23).
This is in response to a Lok Sabha bulletin (pdf) issued on Nov. 23 stating that the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, will be introduced in parliament’s winter session, which begins Nov. 29. Private cryptocurrencies are prohibited in India, according to the draught bill, but “some exceptions are allowed to advance the underlying technology of cryptocurrency and its purposes.”
According to Nischal Shetty, founder and CEO of WazirX, one of India’s biggest cryptocurrency exchanges, their average pricing is now at a 15% discount compared to global rates.
While the fine print of the bill has yet to be revealed, analysts believe the panic selling of cryptocurrencies is partially due to their increased popularity since the draught bill was originally released in January.
According to industry estimates, the country has around 20 million crypto investors, with total crypto assets totaling around 40,000 crore rupees ($5.39 billion). First-time investors, notably those from tier 2 and tier 3 cities, make up a significant portion of India’s bitcoin ecosystem, and they are now concerned, according to Shetty.
Shetty expressed his concern.
“There is a lot of worry in the market because the description (of the law) is the same as January 2021…
“Right now, everyone is pre-empting,” Shetty explained.
“There is a lot of worry in the market since the description (of the bill) is the same as January 2021…right now everyone is pre-empting,” Shetty said.
The description in the Lok Sabha bulletin, which is the same as in the January version, reads:
“To provide a framework that will facilitate the formation of the Reserve Bank of India’s official digital currency.” The bill also aims to outlaw all private cryptocurrencies in India, but it makes exceptions to encourage cryptocurrency’s core technology and applications.”
All private cryptocurrencies, such as bitcoin, ethereum, tether, and ripple, will be prohibited. Cryptocurrency exchanges in India might be forced to close as a result of such a move.
Experts advise investors to take this draught bill with a grain of salt because the administration has demonstrated that it is revisiting the issue since this description was first used.
On November 15, India’s parliamentary standing committee on finance concluded that cryptocurrencies cannot be banned but must be controlled.
“…there is broad consensus on maintaining client protection, financial system stability, and India’s potential to benefit from the crypto technology revolution,” said Ashish Singhal, founder of CoinSwitch Kuber, another cryptocurrency trading platform.
According to him, the cryptocurrency industry is hopeful that the government will include stakeholders in the bill’s preparation.