The Indian government will be considering a bill which would create a digital rupee starting as early as next week, but may also ban certain cryptocurrencies in the country.
According to a Nov. 23 publication, India's lower house of parliament, Lok Sabha, will consider The Cryptocurrency and Regulation of Official Digital Currency Bill as one of 26 new bills when the government body convenes for its winter session on Nov. 29. The document states that lawmakers could vote on legislation that creates “a facilitative framework for creation of the official digital currency” issued by the country’s central bank, the Reserve Bank of India. In addition, the bill proposes prohibiting “all private cryptocurrencies” with the exception of assets “to promote the underlying technology of cryptocurrency and its uses.”
The same bill has previously appeared on the Indian parliament’s agenda but has not led to the government voting on legislation to address digital assets. In March 2020, India’s supreme court overturned a blanket ban on crypto that the central bank had imposed on crypto businesses for roughly two years. Since that time, reports from many media outlets as well as statements from officials suggest that the Indian government is considering different solutions to regulate digital assets.
With a population of roughly 1.4 billion, India choosing to establish a concrete legal framework for a central bank digital currency and ban many token projects would likely make significant ripples throughout the space. Cashaa CEO Kumar Gaurav told Cointelegraph in January the legislation was likely more of an attempt to prevent illicit activities in the industry rather than outright ban crypto.
Should the proposed bill come to fruition, India’s lawmakers would still have to address how to handle digital asset projects legally allowed to operate in the country as well as a digital rupee. A September report from ET Now suggests the country’s tax department could tax crypto earnings through trade and exchanges. In addition, officials from India's Finance Ministry are reportedly considering a legal framework that could treat cryptocurrencies closer to commodities than currencies.