Narendra Modi, India’s Prime Minister, speaks during the United Nations Virtual General Assembly on Saturday, September 26, 2020.

Daniel Acker | Bloomberg | Getty Images

The Indian government plans to introduce a bill in the country’s lower house that bans private cryptocurrencies like Bitcoin and creates a national cryptocurrency.

The so-called “cryptocurrency and regulation of the official law on digital currencies” aims to “provide a framework for the creation of the official digital currency to be issued by the Reserve Bank of India”.

In addition, “the bill is also intended to ban all private cryptocurrencies in India, but provides certain exemptions to promote the underlying technology of the cryptocurrency and its uses.”

Under the front line of Prime Minister Narendra Modi, the right-wing Bhartiya Janata party is currently in control of India’s two parliament buildings (Lok Sabha and Rajya Sabha), giving the legislation a strong chance of passage.

Many countries – including the USA, China, Japan, Canada, Venezuela, Estonia, Sweden and Uruguay – have examined the development of their own digital currencies.

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

With a GDP of nearly 2.9 trillion US dollars, India is the fifth largest economy in the world ahead of Great Britain, France and Italy, according to the World Bank.

While foreign investment declined overall in 2020, India was one of the few major economies in the world to see an increase. The United Nations Conference on Trade and Development estimates that FDI in India increased by 13% in 2020 compared to 2019.