the government of India announced a day earlier that it planned to introduce a bill Regulating Private Cryptocurrency During the upcoming winter session of Parliament in India. The decision, which was announced in the Lok Sabha bulletin, has made a ripple effect in the cryptocurrency market, as the prices of Bitcoin, Solana, Dogecoin have crashed in the country. While the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 seeks to regulate the circulation of private cryptocurrencies in India, it also proposes to create a framework for the introduction of an official digital currency issued by the Reserve Bank of India or RBI.
According to a bulletin listing legislative business posted on the Lok Sabha’s website, “The bill also seeks to ban all private cryptocurrencies in India, however, it allows certain exceptions to promote cryptocurrencies and the technology underlying its use.” allows.” A bill banning all private cryptocurrencies in India will be introduced in the upcoming winter session of Parliament with some hopes of promoting blockchain technology.
“To create a facilitating framework for the creation of an official digital currency to be issued by the Reserve Bank of India,” it added in relation to the introduction of a central bank digital currency (CBDC). No other details were given about it in the Lok Sabha Bulletin. cryptocurrency and the Regulation of Official Digital Currency Bill, 2021.
This leads us to the question: What is a Central Bank Digital Currency?
According to the Reserve Bank of India, a Central Bank Digital Currency or CBDC is a legal tender issued in a digital form by a central bank. It is similar to fiat currency and is one-to-one exchangeable with fiat currency. Only its form is different.
In a statement issued by the bank, RBI describes the difference between CBDC and cryptocurrency. “A CBDC is a digital or virtual currency, but it is not comparable to the private virtual currencies that have grown over the past decade. Private virtual currencies sit at substantial constraints to the historical concept of money. They are not commodities or claims on commodities. Because they have no intrinsic value; some claim that they are similar to gold seem clearly opportunistic. Generally, certainly for the most popular now, they do not represent any individual’s debts or liabilities. There is no issuer. They are not money (certainly not currency) as the term has come to be understood historically.”
In this regard, a CBDC would be something that supports the banking system or complements the existing framework.
RBI Governor Shaktikanta Das has repeatedly reiterated the central bank’s concerns about the digital token and its craze in India despite not being recognized as a currency. The issue was discussed earlier in the month at a meeting chaired by Prime Minister Narendra Modi, who also expressed concerns about the use of cryptocurrencies for illegal work.
“There was a general consensus at the Prime Minister’s meeting on the issue earlier this month that the steps taken by the government in this area would be ‘progressive and visionary’. There was also a discussion then that the “irregular” crypto markets could be treated as money laundering and Terror financing cannot be allowed to become the way forward,” government sources said on the Centre’s decision to introduce the bill.
“A strict mechanism will be put in place so that law enforcement agencies can trace the origins of cryptocurrencies used for illegal or anti-national purposes,” he said on Wednesday.