Bitcoin, Ethereum, Ripple and a lot of other popular cryptocurrencies may not be banned and are likely to continue existing in India despite the government planning to introduce a new Crypto bill in the upcoming Parliament session. The government on Tuesday evening released a list of 26 bills that will soon be introduced in the parliament, including the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021. The bill states that all private cryptocurrencies should be banned to make way for the digital currency which will be introduced by the Reserve Bank of India (RBI).
“To create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India. 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 description of the official document accessed by India Today Tech reads.
India is one of the largest cryptocurrency markets in the world. A recent report suggested that the country has more than 10 crore crypto owners while homegrown crypto exchange platforms have maintained that around 2 crore Indians have invested in cryptocurrencies. Seems like most of them reacted to the government’s decision to introduce a new bill.
Most cryptocurrencies started bleeding on Tuesday night as there was a general panic among investors, some of whom must have also started pulling out their money. Bitcoin, Ethereum, Tether and almost all other major cryptocurrencies saw a dip. However, if you go by the simple technical definition, none of them might actually be banned. All of these are public cryptocurrencies since transactions done in them are linkable and traceable by design.
What is a private cryptocurrency?
The next logical question to cross your mind should be – if Bitcoin is public crypto, then what is a private cryptocurrency? Well, these are the kind of cryptocurrencies that offer anonymous blockchain transactions. These coins hide a user’s real wallet balance and address, and at times they also mix multiple transactions with each other to elude chain analysis.
These private cryptocurrencies take care of two aspects – anonymity and untraceability. The first to hide the identity behind a transaction, while untraceability makes it virtually impossible for third-parties to follow the trail of transactions. There have been concerns around illegal transactions using these coins.
Some controversial coins like Monero and Dash became popular because of their nature to give users the ability to send and receive value anonymously. Many other private cryptocurrencies have been created since then.
Some countries have already taken action against these private cryptocurrencies. For example, South Korean has prohibited trading privacy coins on the country’s crypto exchanges in order to curb money laundering. The US is yet to have laws against private coins but has developed tools to remove the secrecy of transactions conducted through private networks.
There is still a catch
Bitcoin and Ethereum may only be able to dodge the ban if the government classifies them by their technical definition. If the government is classifying private cryptocurrencies by their ownership, then every crypto token, apart from those issued by the RBI, will be considered private coins. We should get more clarity on this once the government tables the bill in Parliament.