The newly introduced legislation is named “Cryptocurrency and Regulation of Official Digital Currency Bill” gives power to the Reserve Bank of India to create a facilitative framework for the creation of the official digital currency. What is worrying that the bill also prohibits all private cryptocurrencies in India, but it permits for certain exceptions to advertise the underlying technology of cryptocurrency and its uses.
India could become the single key Asian economy to prohibit private cryptocurrencies rather than regulate.
On April 6 2018, the Reserve Bank of India had banned regulated entities from dealing in cryptocurrencies and delivering services for assisting any person or entity in dealing with or settling those. However, the central bank’s banking prohibition was rejected by the Supreme Court in March 2020, bringing positive spin to India-based clients.
Other countries including the United States, China, Japan, Canada, Venezuela, Estonia, Sweden and Uruguay are considering developing digital currencies of their own.
The difference is that cryptocurrencies such as bitcoin are decentralized, while state digital currencies are usually centralized.