India is reportedly set to propose a new bill that seeks to prohibit most private cryptocurrencies as part of the government’s move to regulate virtual currencies in the country.
This bill will, however, allow certain cryptocurrencies in order to foster their ‘underlying technology and its uses’.
The Cryptocurrency and Regulation of Official Digital Currency Bill, which is expected to be introduced in the winter session of the Parliament, also entails a framework for digital currency set to be issued by the Reserve Bank of India (RBI).
RBI, which previously voiced serious concerns about private cryptocurrencies, is expected to roll out its own digital currency next month.
The apex bank earlier argued that cryptocurrency could limit its ability to manage inflation, foreign exchange and the overall economy in addition to backing illegal activities.
In April 2018, the RBI barred financial institutions from providing services to anyone trading in virtual currencies.
The Supreme Court of India ruled against the restriction last year, allowing the trading of cryptocurrencies in the country.
The government’s latest move is part of its strategy to pay the way for the new Central Bank Digital Currency (CBDC), Reuters reported citing a senior government official.
Earlier this year, the Indian government weighed criminalising the possession, issuance, mining, trading and transference of crypto assets. However, it failed to introduce a bill in Parliament.
According to industry estimates, India has 15 million to 20 million crypto investors holding crypto worth around $5.39bn (INR400bn).
In September this year, China banned all crypto transactions and services.