Indian Government to Ban Private Cryptocurrencies

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The government of India is thinking of imposing an embargo on what it calls ‘private cryptocurrencies’ in the country.

On Tuesday, at the 19th meeting of the Financial Stability and Development Council (FSDC), the finance minister Mr. Arun Jaitley addressed ‘the issues and challenges’ of crypto assets and digital currency, among other things, as per the press release published by the government’s Press Information Bureau.

In a discussion, the council was summarized on the ‘deliberations’ by a high-level committee chaired by the secretary of economic affairs to come up with an “appropriate legal framework to halt the use of private digital currencies in India.”

While the status of any framework for the prohibition is right now unclear, if it comes into force it would possibly rule out the general use of digital currencies by the nation’s citizens for exchange and trading. Although, the wording would seem to leave India before the launch of a central bank digital currency (CBDC), as has earlier suggested.

In August, the Reserve Bank of India (RBI), indicated it was researching a possible introduction of a rupee backed CBDC to cut its annual bill of nearly $90 million for minting physical cash.

In spite of the negative inclination on private digital currencies forms of money at the advisory group meeting, it further saw discussion of a plan to ‘promote’ the use of distributed ledger technology (DLT).

The National Institution for Transforming India, widely know as NITI Aayog, has stated it was looking to develop a proof-of-concept to explore blockchain in key sectors including education, health, and agriculture.

The meeting happened at the time when the digital marketing industry is already in crisis following an April order by the RBI that restricted domestic banks from giving services to crypto firms like crypto exchanges.

As the exchanges have been looking for ways to keep their businesses from failing, including launching crypto-to-crypto trading. Although, Zebpay, once the biggest digital currency exchange by trading volume in the nation, shut down its trading services a month ago. Besides, last week, a crypto ATM run by Unocoin exchange was seized by police and its co-founder arrested.

Petitions from many exchanges to overturn the RBI ban are currently heard at the Supreme Court of India, which on 26th Oct. asked the government to give its opinion on digital currencies within two weeks.