Ban or No Ban: Conflicting Reports on Crypto Regulation Coming Out of India

November 26, 2021 Bitcoin.com

Experts divided on how far India’s ‘private crypto’ ban will go

November 25, 2021 Coin Telegraph

Previous documents from the Indian government indicate that it believes any cryptocurrencies not issued by the government are considered private, and therefore could be banned.

Government documents from 2019 have been cited by an Indian crypto expert to suggest that the proposed ban on all “private cryptocurrencies” could include just about every crypto.

The Indian government this week announced it would introduce the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 when it convenes at the Winter Session on Nov. 29.

The bill seeks a legislative vote on creating an official digital currency while imposing a ban on “all private cryptocurrencies.” However, there seems to be a lot of confusion regarding what exactly constitutes a “private cryptocurrency," with some users speculating it could refer to "privacy" coins such as Monero or Zcash.

Founder of crypto news website CoinCrunch India, Naimish Sanghvi, explained in a Nov. 25 interview on India Upfront that by the government’s definition, private crypto could mean just about every cryptocurrency there is. He said:

“In the 2019 Department of Economic Affairs report on cryptocurrency, they essentially said that everything that is non-sovereign is designated as a private cryptocurrency.”

“And by that logic, it means that Bitcoin and Ethereum will come into that definition,” he said, adding that “anything issued by the government is public and everything issued by private players is public.”

Looks like all cryptocurrencies are going to be banned in India. Some people took private cryptocurrencies to mean Monero, ZCash, etc. Not so. They mean all of them. https://t.co/Bx4dyX5M0u
— ciarán.eth (@C1aranMurray) November 24, 2021

The 2019 report in question recommended that “all private cryptocurrencies, except any cryptocurrency which may be issued by the government, be banned in India.” It stated:

“All these cryptocurrencies have been created by non-sovereigns and are in this sense entirely private enterprises.”

But marketing manager at Indian crypto exchange WazirX Rohit Kundliwal urged for calm and downplayed fears of an outright ban.

In a Linkedin post yesterday Kundliwal pointed out that crypto cannot be banned, only regulated and that there is no clarity on what constitutes a private cryptocurrency.

He added that “Shri Narendra Modi, Nirmala Sitaraman, Finance Ministry and many prominent and sane politicians have told multiple times that there will not be a blanket ban on crypto.”

Meanwhile, Indian Shiv Sena MP Priyanka Vickram Chaturvedi said in a Nov. 24 interview with India Today that the proposed ban is a “move backward and a little too late.” She said:

“Banning private cryptocurrencies is basically ending the entire idea of a new fintech that can emerge as a huge employment and generator for the new economy.”

She said that the government must “facilitate an environment which is evolving and thriving. The impact of doing this... is that you are killing this entire space.

The market reacted dramatically to the news of a possible ban, with prices on Indian crypto exchange WazirX plummeting on Wednesday morning at 3:30am UTC as users scrambled to sell their holdings. The panic selling event tanked the price of Bitcoin (BTC), Ether (ETH) and Cardano (ADA) in double-digit local price depreciation.

On Nov. 18, Indian Prime Minister Narendra Modi called on all democratic nations to work together to regulate cryptocurrency, specifically Bitcoin, to “ensure it does not end up in the wrong hands which can spoil our youth.”

Crypto prices in India tumble after crypto bill announced

November 24, 2021 Coin Telegraph

Ban

The token prices on the Indian crypto exchange WazirX crashed following the announcement of a bill that would ban all private crypto.

Regulatory discussions in India around a crypto ban caused panic selling on major crypto exchange WazirX, resulting in massive price drop on leading cryptocurrencies including Bitcoin (BTC) and Ether (ETH).

Crypto prices in India crashed soon after the parliament announced to introduce and list 26 new bills in the Winter Session, which included the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021. As Cointelegraph reported, the bill seeks a legislative vote on creating an official digital currency while imposing a ban on “all private cryptocurrencies,” starting Nov. 29.

A mass sell-off on WazirX in the morning of Nov. 24 at 3:30 a.m. UTC tanked the price of Bitcoin from nearly Rs. 4,600,000 ($61,820.73) to Rs. 3,917,659 ($52,650.55), a drop of –14.8% within two hours. Similarly, other popular tokens including Ether and Cardano (ADA) experienced double-digit price depreciation locally on the exchange.

*Bitcoin price crash on WazirX. Source: WazirX*

Speaking to Cointelegraph, WazirX CEO Nischal Shetty highlighted that the Indian crypto market usually trades at a premium compared to the global market:

“This event of panic selling has led the Indian market to correct and the prices to reach the global level.”

Shetty also pointed out the various use cases of cryptocurrencies as an asset or utility and quoted the former Finance Secretary of India Subhash Chandra Garg’s suggestion that “there should be a prohibition on the ‘currency’ use case of crypto,” if any.

Jay Hao, CEO of crypto exchange OKEx, told Cointelegraph about the need for a nuanced approach towards regulating crypto assets in India:

“India is home to the highest number of crypto owners in the world and the onus lies on the government to protect the interest of a large number of crypto investors in the country.”

Commenting on India's crypto ban, BTC Markets CEO Caroline Bowler said, “This ban won’t work in the long-term and would be a step backwards,” adding that “banning is not an option to protect investor interest.” Bowler stated:

“The thing with cryptocurrency is that while governments may try to ban it or try to contain it, the very decentralised nature of the technology somewhat prohibits that.”

As a final word of advice to the Indian inventors, Shetty believes in the need to have faith in our lawmakers. “Let’s not panic,” he concluded.

This comes after a parliamentary panel discussion on cryptocurrency on Nov. 15, where a plurality of regulators concl that, although crypto can’t be stopped, it should be regulated more heavily.

In August, a representative from the Reserve Bank of India said that it planned to commence preliminary trials for a central bank digital currency before the end of 2021. India is currently one of the largest markets in the world, with over 20 million crypto investors.