Red Alert For Indian Crypto Investors — Panic Selling. Popularity of crypto is in its freedom and anonymity. But what if you have to buy cryptocurrency from government?
- Centre proposes a Bill to introduce in the Winter Session of Parliament
- Bill aims at banning all forms of private cryptocurrencies in circulation
- Government further aims at introducing official crypto of nation to be issued by RBI
- Panic selling in Indian market, platforms like WazirX crash
Cryptocurrency is once again under the radar of India’s Central government, stirring a frenzy among investors. Government of India has proposed a Bill that advocates for the nation to have its official digital currency that would be issued by Reserve Bank of India (RBI).
The Bill will be presented in the upcoming Winter Session of the Parliament and is called ‘Cryptocurrency and Regulation of Official Digital Currency Bill, 2021’.
So what’s more in the Bill for cryptocurrency investors?
The proposal seeks to ban all sorts of private cryptocurrencies in the country with some vague exceptions. The underlying technology in the crypto industry and its uses are not just exempted but will be promoted.
A similar Bill was proposed last year that signals towards a possible blanket ban on all cryptocurrencies.
Panic Selling Across India- New Bill Scares The Investors
As soon as the news came out on Tuesday, Indian investors succumbed into a selling frenzy according to the CEO of WazirX, Nischal Shetty —We witnessed a lot of selling pressure in the Indian market.
He further added—
The stance of government looks similar to the last one. Will have to go through the contents of the bill. Bitcoin is a public cryptocurrency on a public blockchain… This is a big moment for India… Our nation has come a long way in these 3 years! It speaks volumes about how India is determined to dominate the web 3.0 era.
However, a lot of investors and non-investors are unclear about what exactly does a private cryptocurrency constitutes?
What is a private cryptocurrency?
The term, as proposed by the government, can be highly vague even for the experts. What makes the identification difficult is the lack of clarity whether the authorities have used the term “private cryptocurrencies” in a technical sense or legislative.
We shall try to decode the both.
Technically, privacy and public coins differ in terms of security. In the world of decentralized finance, transactions are recorded, shared and synchronized in respective electronic ledgers through independent nodes (computers). What this process lacks is the presence of a traditional centralized ledger.
However, these digital ledgers are classified into public and private category based on who can access them- anyone or just the concerned parties in the network. Despite high anonymity that cryptocurrency offers to its holders, transactions can still be traced by linking addresses, therefore, compromising with the idea of privacy.
Government’s Ambiguous Reference on Private Crypto — So what is the distinction between public and private cryptocurrency?
The answer is, degree of traceability. Public coins can be easily linked and traced, therefore, making it comparatively easier than private coins to trace transaction.
On the other hand, private coins deploy such robust tactics that it hides the transaction by default. The transaction details in the ledger of private coins are blurred in order to safeguard the privacy of the holder.
This explains one theory why government wants to ban private coins as regulating and tracing the transactions on these ledgers is a herculean task.
However, when the government says private cryptocurrency, it can also mean every crypto except the the official crypto that the Centre is proposing to introduce officially. If that happens, investors will only be able to trade crypto that are issues by Reserve Bank of India in the time to come.