According to previous documentation from the Indian government, any cryptocurrency not issued by the government is deemed private and hence might be prohibited.
An Indian crypto specialist referenced government papers from 2019 to show that the intended ban on all “private cryptocurrencies” might encompass just about any cryptocurrency.
The Indian government said this week that when the Winter Session convenes on Monday, it would 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 may relate to “privacy” coins like Monero (XMR) or Zcash (ZEC).
However, Rohit Kundliwal, marketing manager at WazirX, an Indian crypto exchange, counseled restraint and dismissed worries of a blanket ban.
Kundliwal said on LinkedIn on Wednesday that cryptocurrencies cannot be outlawed, just 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.
She stated that the government must “enable a changing and vibrant environment.” Doing this has the effect of annihilating this entire place.”
The market responded strongly to the possibility of a ban, with WazirX prices plunging around 3:30 a.m. UTC on Wednesday morning as users hurried to liquidate 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.”