Is India Banning Cryptocurrencies Heres What You Need to Know

Coinworld reported:
Some regulatory agencies believe that “private cryptocurrencies” should be banned
CBDC continues to receive support from Indian institutions
India
It has had a complex relationship with cryptocurrencies for years. Recently, this relationship has become the focus of attention after local media reports that major regulatory agencies and institutions in the country support banning “private cryptocurrencies” such as Bitcoin and Ethereum. According to the Hindustan Times, these regulatory agencies believe that any advantages offered by these “private cryptocurrencies” can be achieved by using CBDC.
It is worth noting that the above report does not mention officials or institutions that hold this view. Therefore, it is difficult to determine how strongly the government itself feels about this proposal.
Currently, the Indian government is preparing a discussion paper on the subject of cryptocurrencies, which may precede legislation. Although the government has held multiple rounds of consultations in the past few months, the current consensus is that the risks of using cryptocurrencies outweigh the benefits.
In fact, an official claimed, “CBDC can do everything that cryptocurrencies can do. In fact, CBDC has more advantages minus the risks associated with private cryptocurrencies.”
However, given the increasing popularity of this asset class in the country, the Indian government may eventually choose to support assets such as Bitcoin and Ethereum. Furthermore, regardless of its stance on cryptocurrencies, India has always been positive about blockchain technology and its broader applications.
Lack of “institutional confidence”
The reversal of the above consensus will depend on institutional confidence in the asset class. For example, the Governor of the Reserve Bank of India has long expressed concerns about cryptocurrencies and their volatility. Like many people working with the government, Shaktikanta Das often speaks highly of CBDC while emphasizing the potential risks associated with cryptocurrencies.
Indian Finance Minister Nirmala Sitharaman also holds similar views.
In 2023, India adopted a comprehensive report by the International Monetary Fund-Financial Stability Board, which recommended not to completely ban cryptocurrencies. However, the report also allows for stricter regulation of this asset class. Currently, India seems inclined towards this idea.
Cryptocurrency entities also feel the heat!
Not only cryptocurrencies, but cryptocurrency entities have also been on the wrong side of the Indian government.
Consider the case of Binance, for example. As early as January 2024, India blocked access to cryptocurrency exchange applications and platforms, citing non-compliance with anti-money laundering laws. However, in August, the situation reversed and Binance received support from the Financial Intelligence Unit (FIU) of India for registration as a reporting entity.