The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, will be presented in Parliament during the winter session.
Its goal is to develop a framework that will make it simpler for the Reserve Bank of India to introduce an official digital currency.
It aims to regulate bitcoin and, reportedly, restricts the usage of private cryptocurrencies.
The Bill's specific contours have not yet been made public, and there have been no public deliberations.
Here's how things are right now:
In India, an inter-ministerial committee on cryptocurrency has recommended banning all private cryptocurrencies except state-issued virtual currencies.
The Reserve Bank of India (RBI) has also highlighted concerns about the market for cryptocurrencies, which it has communicated to the government.
In March 2020, the Supreme Court overturned the RBI's 2018 circular forbidding banks and financial organisations from providing services related to cryptocurrencies (on the basis of "proportionality").
Cryptocurrencies: What Are They and How Do They Work?
Cryptocurrencies are digital currencies that function without the help of a central bank and rely on encryption to control the generation of money units and verify the transfer of payments.
Cryptocurrencies such as Bitcoin, Ethereum, and others are examples.
What is the government's motivation for banning cryptocurrencies:
Consumer protection: Consumers are at risk from cryptocurrencies. They are not legal tender because they are not backed by the government.
Market volatility: They are incredibly volatile due to their speculative character. For example, Bitcoin's value has decreased from USD 20,000 in December 2017 to USD 3,800 in November 2018.
Security risk: If a user's private key is lost, he or she loses access to their cryptocurrency (unlike traditional digital banking accounts, this password cannot be reset).
Malware threats: Technical service providers (cryptocurrency exchanges or wallets) may store private keys that are vulnerable to malware or hacking in some cases.