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Cryptocurrency ban: RBI’s proposed digital currency project and what it means for you, explained

The government is preparing to introduce a law to ban private cryptocurrencies such as bitcoin and launch a framework for an official digital currency issued by the Reserve Bank of India.

The law will create a facilitative framework for creation of the official digital currency to be issued by the central bank, according to the agenda published on the Lok Sabha website on Friday.

The proposal to ban cryptocurrency is among the 20 bills to be considered at the Budget session of parliament.

In a recent note, the Reserve Bank of India (RBI) mentioned that it was working on developing its own digital legal tender that has the backing of the state.

This is not the first time that the central bank has spoken about such an effort. In the past, statements have been made about putting in place RBI’s very own cryptocurrency. But nothing substantial has taken place on that front, apart from periodic remarks made by the bank’s top executives.

Got it, last question, what is the legal status of crypto in India?

Crypto is neither banned in India, nor is it legalized – making it hang somewhere in the grey zone. The RBI had banned banks from dealing with crypto exchanges, but that embargo was overturned in March 2020, by the Supreme Court of India. There is a bill pending with Parliament, which seeks to make trading, owning or holding any form of cryptocurrency illegal, but that draft law is yet to see the light of the day. So technically there are crypto exchanges working actively across the country, doing their own due diligence, and working mostly as trading platforms. The RBI, which is prioritizing macro- economic stability in the country throughout the pandemic, has not said much about crypto, but the industry is hopeful something positive will come out soon.

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