The cryptocurrency market in India took yet another hit on Tuesday after a government proposal came out for banning all the private cryptocurrencies in the nation.
The bill, termed as “Cryptocurrency and Regulation of Official Digital Currency” is set to unveil in India’s lower house of parliament next week, which if passed can bring a whole new CBDC backed by RBI, and ban all the private cryptocurrencies in India.
Cryptocurrency in India
On late Tuesday, partially negative news on cryptocurrency regulation in India spurred panic selling among the retail crypto investors. As the Indian government is preparing for Winter Session 2021 scheduled next week, an agenda depicting about 26 bills was released.
This included the long-awaited cryptocurrency regulation, titled “Cryptocurrency and Regulation of Official Digital Currency Bill“, with the brief description saying banning all private cryptocurrencies in India. While this is just a proposal and is yet to be passed, it triggered panic among investors anyway.
BREAKING: Indian Government introduces 'The Cryptocurrency & Regulation of Official Digital Currency Bill, 2021' in winter session of Parliament
Bill seeks to create a facilitative framework for the creation of a CBDC & ban private cryptocurrencies. pic.twitter.com/juwXzvhlq0
— Mr. Whale (@CryptoWhale) November 23, 2021
Pessimist retail investors dumped most of their holdings, selling to whatever the price being offered at the moment. This caused prices of most coins to crash significantly, with Bitcoin taking a 20% plunge at least. This panic selling event occurred only among the Indian community, while the foreign players in popular exchanges like Binance, Coinbase, etc remained stable.
This bill also proposed introducing a new Central Bank Digital Currency (CBDC), backed by the nation’s banking regulator – Reserve Bank of India. This could be similar to China’s digital Yuan, introduced earlier this year. While the description didn’t explain what categorizes as private cryptocurrencies, the government may still have a tough time banning all of them.
There were similar rumors in past saying the Indian government will ban cryptocurrencies entirely, but didn’t happen yet. A blanket ban from RBI in 2018 was also disputed by a coalition of Indian cryptocurrency firms and successfully reversed to operate smoothly. Yet, clear regulation on handling and mining cryptocurrencies in India is yet to come.