During next year’s Budget Session of Parliament in February, the Indian government is expected to present a new bill to regulate cryptocurrencies in the nation. The draught, which was made public earlier this year, prohibited private cryptocurrencies and allowed the Reserve Bank of India to launch its own digital money ( CBDC).
However, with a rising number of cryptocurrency investors in the nation and a blooming ecosystem of blockchain applications, outright bans on cryptocurrencies may not be the best option.
“Yes, theoretically, a government can say yes to CBDCs and no to private cryptocurrencies but you have problems both from a development perspective — stifling the software ecosystem and creator ecosystem — as well as from a legal perspective, where it could be challenged that it is unconstitutional,” Jaideep Reddy, a technology lawyer with Nishith Desai Associates (NDA) specialising in the field of crypto, fintech and tech policy, told a website during a webinar titled ‘The Framework: Crypto Regulation And India’.
To work, blockchains require cryptocurrency.
The Indian state of Maharashtra established a cooperation with blockchain startup LegitDoc earlier this year to issue diploma certificates in order to combat the country’s longstanding problem of bogus degrees.
Even the Central Board of Secondary Education (CBSE) has implemented blockchain to become paperless and tamper-proof outcomes.
These are blockchain technology application cases on paper. However, it’s a public blockchain record that requires Ether — the Ethereum platform’s coin — to pay the network fees for validation.
This is true across the board for all blockchains. It’s the SOL token for Solana. It’s the ADA cryptocurrency for Cardano. And, as previously said, Ether is the currency of Ethereum, which has one of the most sophisticated ecosystems.
“A lot of these blockchain use cases won’t work without a thriving and enabled cryptocurrency ecosystem.”Jaideep Reddy, a technology lawyer with Nishith Desai Associates told Business Insider
The issue of sustaining the Indian constitution’s integrity in the face of cryptocurrency
When the Reserve Bank of India declared a blanket ban on cryptocurrencies in 2018, India attempted to prohibit them for the first time. The move was eventually overturned by the Supreme Court, which ruled that it was ‘unconstitutional.’
“There is a regulatory answer for every issue statement that isn’t a prohibition,” Reddy added. This implies the Indian government would have to explain why a ban was the only way to deal with any cryptocurrency-related issues.
“Today, we have basic rights to run business and pursue various goals that an individual desires, and there can only be fair constraints on that,” Reddy continued. If the Indian government issues a blanket ban, it must pass the “reasonable limitation” standard.