A bill to regulate cryptocurrencies and provide a framework for the RBI digital currency will be introduced in the Lok Sabha this session.
Is the Bill going to BAN cryptocurrencies in India?
The Bill contents are not yet public; it is only listed and has not been officially introduced; however, we will only know the exact details once it’s public.
As can be gathered from the short description, the Indian government plans to curb the use of “Private Cryptocurrencies” and might only allow RBI-issued “Digital INR” as a currency.
What does Private Cryptocurrency mean?
The Indian regulator’s definition of Private Cryptocurrencies, as we understand from our years of meetings and dialogue with them is; Cryptocurrency issued by an individual or company which is not a sovereign state (Government). Previously they have even considered Bitcoin as a Private cryptocurrency even though it is a Public ledger and completely decentralized.
There is no official definition of Public/Private Crypto as of yet; the new Bill will probably have a clear definition.
When will the Ban come into effect?
The Bill has not been introduced yet, and it is a lengthy process for a Bill to become a law, and there may be many amendments during this phase.
There are four possible outcomes to the bill being introduced:
Bill is passed with amendments (Scenario 1)
The Bill is discussed in the Lok Sabha and referred to a standing committee. The standing committee considers amendments and holds meetings with industry stakeholders resulting in a favorable regulatory framework.
Bill is passed with restrictions as a legal tender: (Scenario 2)
Usage of Cryptocurrency for Payments or use as a Currency may be prohibited. Using it as an “Asset” or store of value may be allowed.
Bill is passed with restrictions on every aspect of Trading and Holding : (Scenario 3)
Trading and holding Cryptocurrencies become illegal, and holders are allowed to sell their assets or dispose of them. Ideally, at least three months will be provided for the same, after which it might become illegal to hold and trade crypto in India.
At this stage, the Industry body and the crypto users of India can file a court case to oppose the laws, as we did for the RBI circular with a positive outcome in the supreme court.
Bill is opposed/kept aside or disposed of: (Scenario 4)
The members of Parliament may oppose the bill in its entirety and dispose of it or there are chances of the bill not being taken up for discussion due to other priorities.
If banned, should I worry about my past trades?
Any regulations that come into effect will be for dates after which it becomes a law, and historical trading does not come under any new law. All trading activity as of now and before the Bill becomes a Law is completely legitimate.
Should I sell all my crypto holdings and convert them to INR?
There is no need to panic sell. The news is only intended for the introduction of the Bill. It has not become a Law yet. If the Bill bans cryptocurrency trading, the law must provide a timeline after a law is passed to dispose of the assets.
Wait for the law to take its course; as of this date, Trading and Holding Cryptocurrencies is NOT illegal or prohibited in India.
Let’s have faith in our democracy to follow its due process and make laws favorable for its citizens.