Expert Talk: Government wants to ban “private cryptocurrencies”. What are they?

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Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, plans to ban private cryptocurrencies in India. With no clarity yet, there has been a lot of confusion around what will qualify as private and public cryptocurrencies in India. Here is what experts have to say:

Rahul Pagidipati, CEO of Zebpay

With any new technology, whether it’s an airplane or the Internet, the first laws of a new technology are not very good. So, we want to try and make sure it is. That’s why we have a sandbox for innovation to grow. It’s a way to protect both the sovereign rights of a country and protect people from making mistakes and getting caught into the say Ponzi schemes. So I said we appreciate the idea of regulation, but we want to be very clear that some cryptocurrencies, which are used for speculation probably should not be allowed. In America, imagine it’s a cryptocurrency commission and they would determine which of these currencies would be allowed versus a blanket ban on everything. They list out which are public currencies and which are private.

No one has seen the bill. What the government is saying that any currency which is not backed by sovereign government, for example, the United States or Japan or Australia, would not be a legal tender. And they all say that it’s a ban on private cryptocurrencies. What I personally think is that they’re really talking more about things like Facebook wanted to make a Libra coin. Those types of coins would not be allowed for payments.

There is an Indian project and now called Polygon but the actual coins are called Matic. The founders of Matic created a billion dollars of value. It’s made in India and this is the type of stuff that we want the Indian government to allow.

 Nischal Shetty, founder, WazirX

I would say, there’s debate right now on what exactly are private currencies. And what exactly will be allowed and not allowed. This will be clear once the Bill gets presented. This term private cryptocurrency is not really a term that is used in the crypto ecosystem anywhere. For example, Bitcoin, the most popular cryptocurrency, is more like a public cryptocurrency on a public blockchain and it is not owned by any one company cannot be called as a private cryptocurrency. So, the definition of private cryptocurrency will have to be seen and how exactly this is defined. And then probably we’ll have more clarity. There’s a lot of debate around this whole term itself that the government has said and nobody knows what exactly private cryptocurrencies mean.