BOMBAY (Reuters) – India is planning to introduce legislation to ban private cryptomoney such as Bitcoin and create a framework for an official digital currency to be issued by the central bank, according to a government legislative programme.
The law would establish « a framework to facilitate the creation of official digital currency to be issued by the Reserve Bank of India (RBI), » the programme, published on Friday on the lower house website, said.
The legislation, scheduled for debate during the current parliamentary session, aims to « prohibit all private cryptography in India » but allows « certain exceptions » to promote the underlying technology of cryptography and its uses, the text adds.
In mid-2019, an Indian government task force recommended banning all private cryptomoney, with a prison sentence of up to 10 years and heavy fines for anyone dealing with digital currency.
However, it called on the executive branch to consider launching a government-backed official digital currency.
In April 2018, the RBI ordered financial institutions to sever all links with individuals or companies dealing with virtual currency such as Bitcoin within three months.
However, in March 2020, India’s Supreme Court authorized banks to handle encrypted transactions by stock exchanges and merchants, overturning a central bank ban.
Governments around the world have been looking for ways to regulate encryption, but no major economy has taken the radical step of banning it, although concerns have been raised about the potential misuse of consumer data and its possible impact on the financial system.
(French version Benjamin Mallet)