A Bloomberg report has revealed that Indian authorities are proposing a change to digital asset categorization and making them investment assets for only large investors.
The Proposal Isn’t Law Yet
Indian legislature would debate and decide on PM Modi’s crypto bill before the house during their next parliamentary session, which begins on November 29. Part of the bill will involve deciding whether to change the least amount an investor can invest in virtual assets, but these virtual assets will not be used for financial transactions.
However, Bloomberg reports that the proposal isn’t finalized yet. Since the legislature hasn’t approved the proposal, they can still amend it before making it a law. The proposed bill states that all “private” digital currencies should be banned. However, there is no clear definition of what makes a digital currency “private.” Hence, the legislature will make this clarification, including additions on how digital currencies are promoted.
The Aftermath Of The Proposal
Almost immediately after the proposal hit the public domain, some Indian crypto investors started selling their digital assets. The worst-hit assets were doge and SHIB because of their massive popularity in the South Asian nation. It got to a stage that prices of digital assets fell by 11% on Indian crypto exchanges. However, top crypto exchanges such as Binance and Coinbase are yet to experience such massive sell-offs.
India’s apex bank had previously reiterated its desire for the authorities to outrightly ban virtual currencies since they could hurt the nation’s economy. However, Indian authorities are only considering implementing the tax on capital gains from crypto in its next budget.
The bullishness of the crypto market has been a substantial boost for India’s digital currency sector. Indian crypto investors and traders have been enjoying capital gains from their crypto investments and trading without paying anything in the form of taxes.
Phasing Out BTC And Altcoins For The Digital Rupee
Many Indian crypto stakeholders believe that that ban on cryptocurrencies (BTC and altcoins) is to pave the way for the broader adoption of the digital Rupee. India’s apex bank (the RBI) continues to make efforts towards the launch of the digital Rupee and wouldn’t want the private digital currencies to hinder this objective.
India is using the same playbook that saw China phase out all crypto-related activities to make way for the launch and adoption of the digital Yuan. Chinese authorities plan to use the digital currency electronic payment (DCEP) and e-Yuan as a complete replacement for the physical Yuan. The pilot phase of the DCEP is being tested in large cities such as Beijing and Shanghai.
The attention to detail the Chinese government is giving the DCEP shows its seriousness in making the citizens adopt the DCEP initiative. Similarly, Japan’s central bank (the BoJ) launched the initial phase of the national digital currency earlier this year as it doesn’t want to be left out of this emerging global financial innovation and revolution. The BoJ plans to launch the next phase of the CBDC project in early 2022. This next phase will denote the responsibilities of the players in the crypto market.
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