The Centre is going to table a Bill in the Budget Session of Parliament banning all private cryptocurrencies such as Bitcoin in India and to deal with the creation of a legislative framework for an official digital currency. The Reserve Bank of India (RBI) is exploring the option of issuing a digital version of the rupee, which could serve as the Central Bank Digital Currency (CBDC).

The Bill, ‘The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021’ is to be tabled in the Lok Sabha Session as per the papers placed before the Parliament bulletins.

“To create a facilitative framework for creation of theofficial digital currency to be issued by the Reserve Bank of India. The Bill also seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of crytptocurrency and its uses, said the purpose of the Bill in the papers placed before the bulletins.

For the past six-seven years, including India many countries were looking for the introduction of the digital currencies, when Bitcoin like crypto currencies started flooding in the World and their trades became proffered in many sectors. The Reserve Bank of India (RBI) is also exploring the option of issuing a digital version of the rupee, which could serve as the Central Bank Digital Currency.

The proposed bill will provide the Reserve Bank of India (RBI) with the necessary legal powers to develop a central bank-backed digital currency (CBDC), according to Parliament Bulletin on the new Bills to be placed before Lok Sabha and Rajya Sabha.

The Government wants to promote the use of blockchain across various use-cases, this bill is expected India’s entry the global race of digital currencies or CBDCs while at the same time banning “private” crypto-currencies like Bitcoin and Ethereum among others.  Recently China also banned private operators in this field by regularising the government operation on digital or crypto currency.

The Government’s decision to introduce The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 comes a week after the RBI said it had begun exploring the possibility of issuing and developing a digital currency or digital Rupee.

This is a reversal of the RBI’s position. Back in December 2019, RBI Governor Shaktikanta Das said that it was very early to speak on CBDCs. “Some discussions are going on. Technology has yet not fully evolved. It is still in very incipient stage of discussions and the RBI we have examined it internally,” Das said. Indian crypto founders are taken aback by this news, but still hope that the Government will work with the industry to ensure that there is some legality to their operations going forward.