New Delhi: Earlier this week, the Central government announced that it will soon introduce a bill in the upcoming winter session of the Parliament to ban all private cryptocurrencies, a move that shook crypto investors in the country. With the decision to ban a few digital coins, the government has also revealed plans to introduce an official digital currency. The Reserve Bank of India (RBI) is expected to issue the digital coin that will be regulated by the central bank.
The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, will aim to regulate the cryptocurrencies in the country. The law will also become the basis for the introduction of RBI issued digital currency in India.
On Lok Sabha’s website, the bulletin listing reads, “The Bill also seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.”
The RBI is expected to use the underlying technology of cryptocurrency, which is blockchain, to issue digital currency. The government will also aim to promote other use cases of blockchain technology.
“To create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India,” the bulletin listing read. But the question still arises of how RBI’s digital currency will be different from popular coins such as Bitcoin or Ethereum.
To keep it simple, we’ll first have to understand that RBI will introduce a central bank digital currency (CBDC) that isn’t exactly a cryptocurrency. The major difference between a CBDC and a cryptocurrency is that the former is regulated by states while the latter is decentralised.
Moreover, CBDCs are much more stable than cryptocurrencies. India’s isn’t the first nation that is going to launch its own digital coin. For instance, Singapore is working on Project Ubin, Canada has Project Jasper, the UK is bullish on a cross-border interbank payment and settlements while France is pinning hopes on Digital Euro. Also Read: Airtel, Nokia team up to conduct India’s first 5G trial in 700 MHz band
Earlier this year, RBI has also given a clarification on what CBDC is. “CBDC is a digital or virtual currency but it is not comparable to the private virtual currencies that have mushroomed over the last decade. Private virtual currencies sit at substantial odds to the historical concept of money. They are not commodities or claims on commodities as they have no intrinsic value; some claims that they are akin to gold clearly seem opportunistic. Usually, certainly for the most popular ones now, they do not represent any person’s debt or liabilities. There is no ISSUER. They are not money (certainly not CURRENCY) as the word has come to be understood historically,” the central bank had said. Also Read: Own a special Rs 1 coin? You can earn up to Rs 2.5 lakh by selling it online, check process