The Centre’s move to bring a bill in the upcoming Winter Session of Parliament to regulate cryptocurrency has sparked a ripple effect, with bitcoin prices crashing to the lowest in a month.
As markets and experts speculate on the consequences of the decision, sources in the security establishment told CNN-News18 that the regulation will not be an outright ban.
“A regulation mechanism will be in place so that crypto is not misused. The government is concerned about the underground transactions happening against cryptocurrency — particularly its role in ‘hawala’ and terror funding,” they said.
They added that cryptocurrency will not be recognised as legal tender as this is dangerous for currency and taxation system of the country. “A strict mechanism will be in place so that law enforcement agencies can trace the origin of cryptocurrency used for illegal or anti-national work,” they said.
Sources in the government too said the move was aimed at eliminating the risks of crypto markets becoming avenues for money laundering and terror financing. “In the prime minister’s meeting on the issue earlier this month, there was a consensus that the steps taken in this field by the government will be ‘progressive and forward looking’. It was then also discussed that “unregulated” crypto markets cannot be let to become avenues for money laundering and terror financing.”
The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, is among 26 bills listed for introduction in the Winter Session, beginning on November 29, according to the Lok Sabha website.
This comes a week after a Parliamentary panel, chaired by BJP leader Jayant Sinha, discussed the pros and cons of crypto finance with various stakeholders, and an agreement was reached that digital currencies can’t be stopped but must be regulated.
The bill seeks to “prohibit all private cryptocurrencies in India” but allows for “certain exceptions to promote the underlying technology and its uses”. It also aims to “create a facilitative framework” for the creation of the official digital currency to be issued by the RBI.
On Wednesday, all major digital currencies saw a fall of around 15 per cent and more, with Bitcoin down by around 18.53 per cent, Ethereum fell by 15.58 per cent, and Tether down by 18.29 per cent. According to data sourced from CoinDesk, a New York-based news site specialising in cryptocurrencies, Bitcoin’s value depreciated to $55,460.96 on Tuesday evening, an additional 20 per cent slump from the all-time high of nearly $69,000 that it reached earlier on in November.
India has been taking a keen note on cryptocurrencies, thanks to its robust growth in the country amid a lack of regulations, but the government has been eager to bring in laws to regulate the digital currency sector.
Prime Minister Narendra Modi had last week said cryptocurrencies must not fall into the “wrong hands and spoil our youth”, urging all democratic nations to come together and ensure things like these do not happen. The government and the RBI had recently hinted about floating a strong regulatory control on cryptocurrency to avoid money laundering and terror financing, rather than banning it entirely.