by taking digital currencies out of the banking channels, the central bank is impeding the ability of law enforcement to regulate illegal activities in the industry. Accordingly, the Indian government is now looking to tackle the matter with a certain level of flexibility that would accommodate limited use of the digital assets.
A recent parliamentary bulletin listing on upcoming legislation included a paragraph on “The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021”, which signalled the government’s plans to ban private digital currencies and launch its own digital currency. “To create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India,” the bulletin read. “The bill also seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.”
The news follows the issuance of a digital Yuan by the Chinese government in April this year, followed by the Central Bank of Nigeria, which also issued its on digital currency – the eNaira. Over the past few months, governments and policy makers across the globe have expressed their concern over the risks associated with private cryptocurrencies, with Sir Jon Cunliffe, Deputy Governor of the Bank of England for Financial Stability, warning that they could cause a financial meltdown unless governments step forward with tough regulations.
The Reserve Bank of India also cautioned the public regarding the use of digital currencies, as they become increasingly popular in the South Asian nation. Sharing his views in this regard, earlier this month, RBI governor Shaktikanta Das noted that cryptocurrencies remain a very serious concern from a macro economic and financial stability point of view, while Indian Prime Minister Narendra Modi claimed last week that these digital assets could “spoil our youth”.
