India’s government are set to initiate a bill to ban private cryptocurrencies and create a structure for a central bank-backed digital money, parliament said in a shock announcement late Tuesday.
The proposed bill “seeks to prohibit all private cryptocurrencies in India”, the Lok Sabha said, and comes after Prime Minister Narendra Modi warned last week that Bitcoin presents a risk to younger generations and could “spoil our youth” if it ends up “in the wrong hands”.
It is the latest move by a major emerging economy after China banned all cryptocurrency transactions in September.
India’s crypto market has boomed since the country’s Supreme Court overturned a previous ban in April last year, growing more than 600 per cent over the past year, according to research by Chainalysis.
Between 15 and 100 million people in Asia’s third-largest economy are estimated to own cryptocurrencies, with total holdings in the billions of dollars.
Their investments will now face an uncertain future.
In June, India’s central bank announced that it would introduce its digital currency by the end of the year while warning its “serious concerns” about private cryptocurrencies like Bitcoin, Ethereum and others.
The bill, to come before the new legislative session, will allow exceptions to promote cryptocurrency technology, according to parliament’s bulletin of upcoming business. Still, there are no further details about the proposed legislation were released.
The market price of Bitcoin appeared unaffected and was up 1.67 per cent in Tuesday’s trade.
But the phrasing of the proposed bill sent alarm bells ringing among local traders and enthusiasts.
“The wording has created a panic,” Kashif Raza, founder of crypto-education platform Bitinning, said, adding that the industry expected the government to take a more favourable view after recent consultations with the industry.
“Obviously there will be a shutter-down on the industry,” he added. “The industry will die in its natural way. Intellectual capital will move away, investors will face losses.”
It is yet to be seen if India follows through with their proposed bill. Cryptocurrencies have been under scrutiny by Indian regulators since first entering the local market in 2013.