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According to previous documentation from the Indian government, any cryptocurrency not issued by the government is considered private and hence might be banned.
An Indian crypto specialist referenced government documents from 2019 to show that the intended ban on all “private cryptocurrencies” might include just about any cryptocurrency.
The Indian government said this week that when the Winter Session convenes on Monday, it will propose the Cryptocurrency and Regulation of Official Digital Currency Bill 2021.
The measure calls for a vote in the legislature on developing an official digital currency, as well as a prohibition on “all private cryptocurrencies.” However, there appears to be some ambiguity about what a “private cryptocurrency” is, with some people suggesting that it could relate to “privacy” coins like Monero (XMR) or Zcash (ZEC).
Naimish Sanghvi, founder of crypto news website Coin Crunch India, explained in a Thursday 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.”
However, Rohit Kundliwal, marketing manager at WazirX, an Indian crypto exchange, counselled restraint and dismissed fears of an outright ban.
Kundliwal said on LinkedIn on Wednesday that cryptocurrencies cannot be banned, only controlled, and that there is no clear definition of what defines a private coin.
“Shri Narendra Modi, Nirmala Sitaraman, the Finance Ministry, and many famous and rational politicians have repeatedly stated that there will not be a blanket ban on crypto,” he continued.
Meanwhile, in a Wednesday interview with India Today, Indian Shiv Sena Member of Parliament Priyanka Vickram Chaturvedi claimed the proposed ban is a “step backwards and a bit too late.” She stated, ”
“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 stated that the government must “enable a changing and vibrant environment.” Doing this has the effect of annihilating this entire place.”
The market reacted strongly to the possibility of a ban, with WazirX prices plunging at 3:30 a.m. UTC on Wednesday morning as users hurried to sell their holdings. The panic selling episode sent Bitcoin (BTC), Ether (ETH), and Cardano (ADA) prices plummeting by double digits in local currency terms.
On Nov. 18, Indian Prime Minister Narendra Modi urged all democratic nations to work together to regulate cryptocurrencies, notably Bitcoin, in order to “ensure it does not wind up in the wrong hands, spoiling our youth.”