If you haven’t already heard, the government has announced that they plan to introduce a new cryptocurrency bill. That means all private cryptocurrencies are set to be banned! Don’t miss out on the opportunity to invest in cryptocurrency before it’s too late.
Some definitions suggest that Bitcoin and Ethereum do not fall under the ambit of the ban, but some indications are that all cryptos that weren’t issued by the government could be banned.
During the Winter Session of Parliament, the government announced that it plans to introduce a new cryptocurrency bill and that the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, may ban all private cryptocurrencies, existing investors are a worried lot.
The notification gave details of the bill, saying that it was designed to create a framework for the creation of an official digital currency to be issued by the RBI. Furthermore, the bill aims to ban all private cryptocurrencies in India, although certain exceptions are allowed to promote the underlying technology of cryptocurrencies.
Outlook Money spoke with a few experts about the differences between private and public cryptocurrencies and what investors should do in the current environment while the government clarifies what this means for investors.
Official Ban of Private Cryptocurrencies – Bitcoin, Ethereum, Ripple?
According to Sathvik Vishwanath, co-founder and CEO of Unocoin, a cryptocurrency exchange, private cryptocurrency is anything that is not issued by the government.
In its 2019 report, The Committee To Propose Specific Actions Regarding Virtual Currencies, the ministry of finance urged “all private cryptocurrencies, including Bitcoin, Ethereum, and Ripple, which may be issued by the government, be banned in India”.
Any cryptocurrency that is not issued by the government may be categorized as a private cryptocurrency, if the recommendation can be extrapolated. In support of its argument against private cryptocurrencies, the report stated, “Private cryptocurrencies do not fulfill the essential functions of money/currency, therefore they cannot be used to replace fiat currencies.”
This is the analysis of Sharat Chandra, an emerging tech evangelist and blockchain expert: “Digital currencies such as Central Bank Digital Currencies (CBDCs) issued by central banks and backed by sovereigns are more likely to be referred to as ‘public’ crypto currencies,” he says. According to him, private coins can be defined loosely as digital currencies that are not backed by governments.
The transactions on the blockchain are traceable in cryptocurrencies with a public ledger, but some definitions exclude the bigger cryptocurrencies operating on a public ledger. In the case of Bitcoin and Ethereum, the two biggest coins by market value, transactions are recorded on a public ledger, so the transactions can be traced, but the identity of the users is protected. Other cryptocurrencies, such as Monero and Dash, may be considered private cryptocurrencies because their transactions are not traceable.
A private crypto coin is one that is owned and operated by an individual or entity, explains Sidharth Sogani, co-founder and CEO of cryptocurrency research and analysis firm CREBACO. Bitcoin is not private, it’s decentralised and is available on a public ledger. In India, private currencies are already banned, so private cryptocurrencies will also be banned. However, cryptocurrencies will be treated as commodities, not as a currency.”
According to the purpose of the token or coin, various types of tokens or coins are awaiting clarification.
What Will Happen To The Crypto Market If The Government Passes Legislation To Ban It?
Experts suggest waiting for more information before making any hasty decisions.
There is still uncertainty about what will happen to existing cryptocurrency investors, but experts suggest avoiding any knee-jerk reactions. Additionally, if the bigger cryptocurrencies aren’t classified as private, the majority of investors will probably be protected.
Sogani says the statement from the government bulletin from February 2021 is nothing to panic about. “I don’t think there will be an outright ban. Even if there is, they will give investors enough time,” he adds.
Chandra advises investors not to panic and liquidate their shares merely because of rumors of an impending ban. “Investors should wait until the contents of the bill are made public before taking any action,” he says.
After the bill is introduced in Parliament, it will be discussed according to established protocols. There is no sense in rushing the process,” Chandra says.
According to Ajeet Khurana, who is a crypto advisor, former CEO of Zebpay, and former head of Blockchain and Crypto Assets Council, cryptocurrencies cannot be destroyed. ‘Cryptocurrencies are digital assets.’ A government cannot confiscate a virtual asset such as bitcoin. Unlike digital assets like files, documents, and images, ownership of cryptocurrency is recorded on the blockchain and there are innumerable copies located on computers around the world. So it is not merely a matter of copying or deleting a file,” says Khurana.
The cryptocurrency landscape is rife with risk and volatility. With unclear regulations and the future of cryptocurrency in India, retail investors, who are not already invested, should stay away, at least for the time being.
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Author
Chris Munch is a professional cryptocurrency and blockchain writer with a background in software businesses, and has been involved in marketing within the cryptocurrency space. With a passion for innovation, Chris brings a unique and insightful perspective to the world of crypto and blockchain. Chris has a deep understanding of the economic, psychological, marketing and financial forces that drive the crypto market, and has made a number of accurate calls of major shifts in market trends. He is constantly researching and studying the latest trends and technologies, ensuring that he is always up-to-date on the latest developments in the industry. Chris’ writing is characterized by his ability to explain complex concepts in a clear and concise manner, making it accessible to a wide audience of readers.
