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India would possibly ban personal cryptocurrencies like bitcoin and develop a nationwide digital coin

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Narendra Modi, India’s prime minister, speaks during the virtual United Nations General Assembly on Saturday, Sept. 26, 2020.

Daniel Acker | Bloomberg | Getty Images

India’s government plans to introduce a bill in the country’s lower house that would ban private cryptocurrencies such as bitcoin and create a national cryptocurrency. 

The so-called “Cryptocurrency and Regulation of Official Digital Currency Bill” moves “to create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India.” 

Additionally, “the bill also seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.”

Fronted by Prime Minister Narendra Modi, the right-wing Bhartiya Janata Party currently have control of India’s two houses of Parliament (the Lok Sabha and the Rajya Sabha), giving the legislation a strong possibility of passing.

Many countries — including the United States, China, Japan, Canada, Venezuela, Estonia, Sweden and Uruguay — have explored developing digital currencies of their own. 

However, there are significant differences between national digital currencies and private cryptocurrencies such as bitcoin. Cryptocurrencies such as bitcoin are decentralized, while national digital currencies are typically centralized.

With a GDP of nearly $2.9 trillion, India is the world’s fifth-largest economy, ahead of the United Kingdom, France and Italy, according to The World Bank.

And while foreign investment decreased overall in 2020, India was one of the only major economies in the world to record an increase. The United Nations Conference on Trade and Development estimates that foreign direct investment in India jumped 13% in 2020 compared to 2019.

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Katherine Clark