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Indian Government to ban the cryptocurrencies, while Indian investors are buying Bitcoin
Indian Government had proposed a bill to ban all cryptocurrencies, and they might get their digital currency in the future.
After the announcement of Tesla CEO Elon Musk, the price of Bitcoin has been on the rise. The price has crossed $48,000 from $40,000 in less than two days. Indian investors also seem to join the Bitcoin party after the announcement as the price of Bitcoin increased from Rs 28 lacs to Rs 35 lacs in India.
Amidst this rise, the Inter Ministerial Committee has suggested Indian Government ban all private cryptocurrencies, except the state's virtual currencies. As announced by Nirmala Sitharaman, Finance Minister, on February 9, the Indian Government will soon issue strict guidelines for trading cryptos. Notably, RBI (Reserve Bank of India) had banned the banks from carrying out any cryptocurrency transaction in 2018, and the ban was overturned by Supreme Court in 2020.
RBI and SEBI also don’t have any framework to regulate the cryptocurrencies directly as of now. The existing laws are unable to deal with the cryptos. The Indian Government formed the Inter Ministerial Committee (IMC) to study virtual currencies' issues and suggest the particular actions that need to be taken. The Central Government is also exploring the possibility of bringing a digital version of Indian Rupee, as per the announcement of RBI the previous month. They are planning to launch a Central Bank-backed Digital Currency (CBDC) backed by the Reserve Bank of India. Notably, a CBDC is different from a cryptocurrency (or virtual currency) because CBDC holds a value similar to that of fiat currency issued by the central bank.
After the announcement of this bill by the Government, retail investors are selling their private cryptos that lead to Bitcoin trading at a discount of 6 to 7 percent in the domestic market. On the other hand, smart investors are repurchasing it that further pushes up the Bitcoin price, and as a result, Bitcoin's price in India is now 1 to 2 percent higher than the international price.