India ban all crypto currency

 India is on track to ban all but a few private cryptocurrencies after the government announced Tuesday it would introduce a new financial regulation law.

The 'Cryptocurrency and Regulation of Official Digital Currency' law will create a facilitative framework for an official digital currency issued by the Reserve Bank of India and ban all private cryptocurrencies like Bitcoin and Ethereum.

Earlier this month, Prime Minister Narendra Modi said all democratic nations must work together to ensure cryptocurrencies "do not fall into the wrong hands that can corrupt our youth" - his first public comment on the issue.

The bill, to be tabled in parliament in the next session, will allow exemptions to promote the underlying blockchain technology, the parliamentary release said, without giving further details.

Such a pre-screening approach would hamper thousands of peer-to-peer currencies that thrive on not being controlled by the authorities.

Earlier this year, the government had considered criminalizing the possession, issuance, mining, trading, and transfer of crypto assets.

Money laundering and terror financing?

Modi recently chaired a meeting to discuss the future of cryptocurrencies amid concerns that unregulated crypto markets could become gateways for money laundering and terror financing, sources said separately on Saturday.

The new rules are also likely to restrict marketing and advertising of cryptocurrencies to reduce their appeal to retail investors, said an industry source who attended a separate panel discussion in parliament on Monday.

The government wants to classify cryptocurrencies as an asset class, as demanded by crypto exchanges, rather than a currency, two sources told Reuters.

However, the senior government official told Reuters that the plan was to ultimately ban private crypto assets while paving the way for a new central bank digital currency (CBDC).

The Reserve Bank of India, which has expressed "serious concerns" about private cryptocurrencies, will launch its CBDC by December.

Bitcoin, the world's largest cryptocurrency, is hovering around $60,000 (€53,000) and has more than doubled since the start of this year, attracting droves of domestic investors.

Official data is not available, but industry estimates suggest there are 15-20 million crypto investors in India with a total cryptocurrency holdings of around 400 billion rupees (€4.77 billion).

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