Cryptocurrency assets, Bitcoin and Ethereum, saw a fall in value in India as the country plans to ban transactions of several private cryptocurrencies.
The fall came after the Indian government announced a new financial regulation bill on Tuesday.
The ‘Cryptocurrency and Regulation of Official Digital Currency’ bill sets out to create a framework for an official digital currency to be issued by the Reserve Bank of India, which intends to launch its CBDC by December.
Sources familiar with the matter told Reuters that the government is looking to classify crypto as an asset class rather than a currency.
The bill will ban the trading of all private cryptocurrencies, such as Bitcoin and Ethereum.
If legislators pass this bill, Indians would be barred from transacting in most cryptocurrencies. Under the bill, cryptocurrency trading is punishable with a fine or imprisonment of up to 10 years, or both.
While the draft bill recognises that the virtual assets have advantages such as better record-keeping and efficient cross-border payments, it raises money-laundering risks to consumers and threats to the country’s financial stability as concerns for its potential use.
Following the announcement, Bitcoin fell as much as 17 per cent, Ethereum was down 14 per cent, Dogecoin over 20 per cent, and Polkadot 14 per cent, according to data collated by WazirX, a crypto exchange platform in India.
In February, the Reserve Bank of India raised concerns over financial stability from cryptocurrency. In March, India considered criminalising the possession, mining, trading, and other cryptocurrency transactions ahead of the bill’s introduction.
However, the bill proposes a six-month liquidation period for cryptocurrency asset holders ahead of punishments.