Cryptocurrency prices fell sharply on local exchanges in India after reports that the government plans to introduce a bill in the upcoming winter session of Parliament that would ban most private cryptocurrencies.
The prices of several leading cryptocurrencies, including Bitcoin, Ethereum and Dogecoin, fell by about 15 percent to 20 percent in terms of the Indian rupee on Wednesday.
Under the Cryptocurrency Bill and the regulation of the Official Digital Currency Act 2021, mining, holding, selling, issuing, transferring or using cryptocurrency in India is punishable by a fine or imprisonment of up to 10 years, or both.
The bill, introduced on Tuesday, would allow the processes or technology behind any cryptocurrency to be used for experimentation, research or teaching. India is also looking to develop a framework for the country’s official digital currency, which its central bank will issue through this bill.
The draft law acknowledges that virtual tokens have benefits such as better record keeping and more efficient cross-border payments, but it also raises concerns about the potential use of cryptocurrencies for money laundering, the risks to consumers and the financial threat to the country. More.
Currently, there are no regulations in India regarding the use of cryptocurrencies. With the new bill, the government is considering banning “all private cryptocurrencies,” albeit with some exceptions that are not made clear.
In the wake of reports that the bill will be introduced in the next Parliament session scheduled for November 29, local crypto trading app WazirX has seen heavy user activity, leading to its crash late Tuesday.
Several WazirX users, who tried to sell their investments, complained that they were unable to buy or sell cryptocurrencies on the platform.
WazirX President Nischal Shetty has asked investors not to panic and to show confidence in cryptocurrencies.
“This is not the end but the beginning of crypto regulations in India. The industry has had the opportunity to introduce it. Law makers understand the growing market,” said Mr. Shetty.
“More than 15 million people own cryptocurrency in India. There are ways to reduce bad activity and boost innovation,” he added.
However, the domestic market crash did not affect the global crypto market, with bitcoin still trading near the $57,000 mark.
Although a bill to regulate cryptocurrency has not been introduced in India yet, the government held several discussions with investors and stakeholders throughout the year, suggesting that it may have changed its stance since the time the bill was drafted.
Since these deliberations, sources close to the government have also indicated that the government is looking to regulate cryptocurrency by discouraging trading in cryptocurrencies through massive taxation instead of outright banning virtual tokens.
Prime Minister Narendra Modi also chaired a recent high-level meeting on the use of cryptocurrencies, where government sources asserted that unregulated crypto markets cannot be allowed to become routes for money laundering and terrorist financing.