The Bill That Caused Massive Crypto Crash: Explained


The upcoming crypto bill aims toregulate the digital currency in India

Hours after the government announced that it will introduce the cryptocurrency bill in the Parliament’s winter session, which seeks to prohibit all private cryptocurrencies in the country, all crypto prices crashed by 15 per cent and more. 

As of 11:45 PM on November 23, all major cryptocurrencies saw a fall of around 15 per cent and more, with Bitcoin down by around 17 percent, Ethereum fell by 15 per cent, and Tether down by almost 18 per cent. 

The Cryptocurrency and Regulation of Official Digital Currency Bill 2021 seeks to create a facilitative framework for the creation of an official digital currency to be issued by the Reserve Bank of India (RBI). The bill seeks to ban all private cryptocurrencies in the country, but will allow certain exceptions to promote underlying technology and its uses.

The crypto bill – which aims to regulate the digital currency, will be introduced in the Parliament during the winter session that starts on November 29. The bill is among a total of 26 bills that have been listed for introduction, according to a government statement today.

Last week, the first-ever Parliamentary panel discussion on cryptocurrency was conducted, where a consensus was reached that cryptocurrency cannot be stopped in India, but must be regulated. 

The standing committee on finance meeting was chaired by BJP’s Jayant Sinha, who met the representatives of crypto exchanges, Blockchain and Crypto Assets Council (BACC), industry bodies, and other stakeholders on November 16.

Prime Minister Narendra Modi had also chaired a high-level meeting with officials from various ministries and the Reserve Bank of India (RBI) on the issue. PM Modi urged democratic nations to cooperate in regulating private virtual currencies failing which they could land up in the “wrong hands”.

In a speech at the Sydney Dialogue delivered last Thursday, PM Modi said it was important to ensure the digital currencies should not be used in an unlawful manner as it could spoil the youth. 

The RBI has been very reluctant to accept cryptocurrencies, expressing concerns over potential risks to macroeconomic and financial stability, and capital controls. The Securities and Exchange Board of India (SEBI) has also voiced concerns about the unregulated growth of cryptocurrencies in India, keeping the vulnerable retail investors in mind. 

Last week, RBI Governor Shaktikanta Das said that India needs much deeper discussions on the issue of cryptocurrencies. “When the central bank says that we have serious concerns from the point of view of macroeconomic and financial stability, there are far deeper issues involved. I’m yet to see serious, well-informed discussions in the public space on these issues,” Mr Das had said.

Bitcoin was last trading 16.91 per cent lower at Rs 38,76,950 against the rupee, while Ether declined 14.58 per cent at Rs 2,92,897. 

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