India is preparing a cryptocurrency regulation bill that will be considered in parliament at a meeting starting on November 29. Its contents remain unclear, but one of the reasons why the government raised it is to help the country's central bank create an official digital currency.
"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," said Indian Prime Minister Narendra Modi.
India has had good and bad connections with digital currencies over the past few years, with the country effectively banning cryptocurrency transactions in 2018. The Supreme Court lifted this restriction in March 2020, but recently, there have been calls for stricter regulation as having little rules may push domestic household savings towards a new asset class.
Because of this, Bitcoin fell 12.2% on one of the leading crypto exchanges, Wazirx, since investors fear that the government will end up banning cryptocurrency trading after the bill is introduced to parliament next week. The decline was much sharper than the coin's 1.8% drop globally.
The Central Bank of India opposes private virtual currencies, and its governor, Shaktikanta Das said that the country needs much deeper discussions on the issue of cryptocurrencies.