For this reason, cryptocurrency investors in India should not be hasty in reacting to crypto ban rumors

A large number of crypto users on Indian exchanges resorted to panic selling as rumors of a proposed ban on cryptocurrencies through the forthcoming Crypto Bill surfaced in Parliament. However, experts suggest that crypto investors should not resort to panic selling as nothing is known yet about the content of the proposed bill. They go on to say that crypto investors in the country should remain calm and do their own research before jumping to a hasty conclusion. Investors should also await government comment on the matter and not place undue reliance on information from secondary sources.

A bill to regulate cryptocurrencies in India is expected to be introduced in Parliament in the upcoming winter session. The bill is titled The Cryptocurrency and Regulation of Official Digital Currency Bill 2021.

Interestingly, there is no change in the description of the bill previously listed for introduction to Parliament. It goes on to say, “To provide a facilitating framework for the creation of the official digital currency to be issued by the Reserve Bank of India. The law also seeks to ban all private cryptocurrencies in India, but allows certain exceptions to promote the cryptocurrency’s underlying technology and its uses.

Considering the number of public discussions about crypto over the past 5-6 months and the government’s statements on the need to regulate crypto, not ban it, experts are surprised that the description of the proposed bill to be introduced in Parliament, has not changed . Some even believe it could be a typographical error as the government recently took the view that cryptocurrencies should be regulated in India, not banned.

The description itself mentioned in the Lok Sabha Bulletin contains many dubious formulations. For example, it mentions that the “law also aims to ban all private cryptocurrencies in India.”

What is private cryptocurrency?

The use of the word ‘private’ in the description above has apparently led to panic selling since yesterday. As there is a view that banning “private” cryptocurrencies would mean a ban on all types of crypto assets that are not approved or endorsed by the government. There is another view widely shared on social media that popular coins like bitcoin, ethereum, etc. are publicly traded and their transactions can be tracked, they may not be banned.

However, experts say the government should clarify what it means to use “private cryptocurrencies”. Sharat Chandra, blockchain and emerging tech evangelist, told FE Online: “This is where government needs to get clean. How do you define cryptocurrencies? If I tokenize a portion of a real asset, say real estate, or stocks, how will that crypto token be treated? Ideally, an evaluation framework should be developed to classify tokens depending on their usefulness and use cases. There is no one-size-fits-all approach.”

Bitinning founder Kashif Raza said that there is nothing better than private cryptocurrencies. Instead, there are some privacy coins like Monero. “But these privacy coins are not very popular with investors. As for popular cryptocurrencies like bitcoin, transactions with them can be tracked,” Raza told FE Online.

Attempts at crypto prohibition have not been successful in other countries. In fact, no country in the world has completely banned cryptocurrencies. Even those who have tried have failed.

Raza fears that if the Indian government decided to ban cryptocurrencies outright, it could lead to black marketing that would end up making crypto investors lose more money.

The description of the bill also mentions scope for certain exceptions. Raza said that if the government endorses a total ban on cryptocurrencies, exceptions could be made for holding or using certain coins for educational purposes.

Chandra said stablecoins might be an exception as there is an established case of using stablecoins for faster payment processing. Visa and Mastercard already use stablecoins in their payment networks

BuyUcoin CEO Shivam Thakral said, “I think popular crypto assets like Bitcoin and Ethereum will be pre-approved by regulators to be listed on the exchange.”

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