Cryptocurrencies have become extremely popular all over the world in the last 12 months, and even in countries like India where they were previously banned. The Supreme Court of India allowed citizens to trade in cryptocurrencies in March 2020, overturning a ban placed by the Reserve Bank of India in 2018 in the wake of the Bitcoin price crash in that year. This led to a number of people showing interest in this space and looking to trade and invest in crypto, with crypto exchanges also opening and reporting a huge number of new users, as well as significant trading volumes. We also saw other global trends accelerate in India, namely the use of cryptocurrencies on online gambling websites. Various online gambling providers have offered Indian players the opportunity to place bets through cryptocurrencies, and this has led to a huge rise in popularity of these sites in the country. Thanks to this, there is plenty amount of gambling sites like the Indian casino Winz.io, where users can play their favorite table games of chance with cryptocurrencies.However, all of this may soon be coming to a halt, if a recent bill introduced by the Indian government in Parliament succeeds and becomes a law.

According to this bill, all private cryptocurrencies such as Bitcoin, Ripple, Ethereum and so on will be banned in India, with the Reserve Bank of India looking into the creation of a digital rupee. The bill will also set up the legislative framework for this to take place, with an RBI booklet noting that the central bank is investigating the need for a digital version of the rupee. This is not the first time that an attempt has been made to ban cryptocurrencies in India – a similar bill was mooted in early 2019, but was never introduced in Parliament. While the current bill apparently has certain exceptions which will allow for blockchain development to take place in the country, it would end the nascent cryptocurrency sector in India. Exchanges such as CoinDCX and Coinswitch Kuber have seen a huge increase in users and trading volumes in 2020, and many such exchanges have also raised early stage funding as a result, but the passage of this bill would completely cripple the cryptocurrency industry in the country.

There is some confusion regarding the scope of the bill, since Bitcoin, Ethereum and their like are considered ‘public’ and not private, and therefore many in the industry have argued that they would not fall under the purview of any such ban. According to some industry experts, the RBI or the government would first need to clearly and explicitly define which cryptocurrencies are public and which are private, before passing this bill. Another factor is that over seven million Indians own cryptocurrency in some form, with over $1 billion in assets in the space, and so the government cannot afford to simply erase that wealth overnight. This has raised tentative hopes that the government will invite industry leaders to discuss this bill and will not ram it down their throats.

However, it is concerning that in an official discussion in Parliament, the Minister of State for Finance, Anurag Singh Thakur, had stated that the government considers cryptocurrencies to not be legal tender, and therefore will take all steps to eliminate their usage in India. The excuse given here was that these cryptocurrencies can finance illegal activities, but it is far more likely that the government wants to clear the field for the RBI to introduce a digital currency without any competition. Nevertheless, we must wait and see what the government does in this regard, but the future does not look bright for cryptocurrencies in India.