India Plans to ban cryptocurrency as a payment method
According to sources in the Economic Times, the government would prohibit the use of cryptocurrencies such as Bitcoin and Ethereum for payment. They might, however, be kept as an asset, similar to stocks, gold, or bonds.
According to reports, the Modi administration would also prohibit crypto firms from using ads to encourage people to invest.
The specifics were worked out at a meeting with members from the crypto business on Monday to discuss the country’s digital future.
This comes at a time when India was beginning to recognise Bitcoin as a valid payment option.
In August, Unocoin, a bitcoin trading platform, announced that its customers could use Bitcoins to purchase certificates from over 90 different businesses, ranging from Domino’s pizza to Baskin-Robbins ice cream.
Cryptocurrencies are currently unregulated and unbanned in the nation.
The crypto community has frequently requested that bitcoin be classed as an asset rather than a currency by Indian authorities, and the government appears to be listening.
A regulatory system to govern cryptocurrencies is likely to be put in place as part of the negotiations, with the Securities and Exchange Board of India (Sebi) serving as the authorised regulator.
In a symposium held by the Australian Strategic Policy Institute today, Indian Prime Minister Narendra Modi addressed crypto for the first time publicly.
‘It is critical that all democratic nations collaborate on this and guarantee that it does not fall into the wrong hands, spoiling our kids,’ Modi added.
The law is expected to be introduced in the forthcoming winter session of Parliament by the Indian government.
While the proposed regulation would stymie consumer adoption of cryptocurrency in India, it is an improvement over previous intentions to outright prohibit cryptocurrency in the nation.
Following Prime Minister Narendra Modi’s catastrophic ‘demonetisation,’ which erased 80% of the country’s currency, India essentially prohibited crypto transactions in 2018. People who deal in cryptocurrencies might face up to ten years in prison, according to a government commission.
The restriction was removed by the Indian Supreme Court in March 2020, resulting in a cryptocurrency trading boom, with Indian cryptocurrency investments increasing from roughly $200 million to nearly $40 billion in the previous year.
Despite its opposition to cryptocurrencies, which it sees as a danger to the country’s financial stability, the Reserve Bank of India (RBI) began planning to establish its own Central Bank Digital Currency in February (CBDC). The Bank of England is also considering introducing its own CBDC.
While most countries have banned private crypto-assets, they are still receptive to promoting blockchain, a secure database technology that is at the heart of virtual currencies and, according to experts, has the potential to revolutionise international commerce.
While cryptocurrency trading is not explicitly regulated in the United Kingdom, services such as bitcoin derivatives trading do require authorization.
China is one of the nations that has taken a hard line on cryptocurrency, outlawing crypto trading and eradicating any residual activity, alleging that it jeopardises the country’s efforts to achieve carbon neutrality.
Regulating cryptos rather than outright banning them appears to be a smart decision by India, and other big economies are likely to follow suit.