India is set to ban private cryptocurrencies and create its own official digital currency.
The legislation comes after China started fighting cryptocurrencies by introducing a bill that makes cryptocurrency transactions illegal.
The proposal regulating cryptocurrencies was laid in a parliamentary bulletin, which includes a paragraph called “The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021”.
The Indian government is planning “to create” a facilitate framework for creating of the official digital currency to be issued by the Reserve Bank of India” and “to prohibit all private cryptocurrencies in India.” The bill however “allows for certain exceptions to promote the underlying technology of cryptocurrency and its users.” (The Guardian, 2021)
The PM of India, Narendra Modi sees cryptocurrencies as a threat that could “spoil our youth”. The country’s central bank seems to have the same negative attitude toward these assets, as it warns that cryptocurrencies could disorder microeconomic and financial stability.
Major economies share the same view and are taking a distrustful approach to digital currencies. Sir Jon Cunliffe, the deputy governor of BoE warns that they could trigger a financial meltdown. Nevertheless, the Bank of England and the Treasury are planning to launch an official consultation on the UK central bank's digital currency next year.
However, not everyone views cryptocurrencies as threat. In September this year, El Salvador became the first country in the world to accept Bitcoin (BTC) -4.13% as legal tender.
Laith Khalaf, financial analyst at AJ Bell said: “India’s plan to ban cryptocurrencies has not wrought the same damage on the bitcoin price as China’s summer crackdown, but it nonetheless marks yet another stumbling block in crypto’s advancement as an economic force in the real world.” He added further that El Salvador seems to be an exception and it was “inevitable that cryptocurrencies will continue to encounter either greater regulation or prohibition in more jurisdictions around the world”. (The Guardian, 2021)
A day after El Salvador revealed its plans to create the first “bitcoin city”, The International Monetary Fund warned the country against its rushed approach into cryptocurrency.
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*Stock percentage taken on 26.11.2021 at 09:31.
*Milmo, Dan (24. November 2021). The Guardian: India to ban private cryptocurrencies and launch official digital currency. Last viewed on 26/11/2021 on https://www.theguardian.com/world/2021/nov/24/india-to-ban-private-cryptocurrencies-and-launch-official-digital-currency
