In the matters of lawmaking, the Government’s codified interpretation supersedes all other prevalent interpretations or explanations or meanings.
Since the Lok Sabha bulletin of bills for the ongoing Winter Session of the Parliament of India announced that the crypto bill will be tabled in the session, the country has witnessed several debates about the definition of private cryptocurrency.
The description of the bill states that private cryptocurrency will be prohibited. Many people interpreted it as cryptocurrencies that do not share transaction data such as Monero, ZCash etc.
Some interpreted the terms as any currency which is issued by a private entity.
To clear the ambiguity, we have to understand the law-making procedures. In the affairs of legislation, the terms are interpreted and defined by the legislators.
The definition is provided and codified in a report, bill, etc.
So, it is the definition and the interpretation of the Government which is taken as paramount. It supersedes all other prevalent interpretations or explanations or meanings.
The jargon used in the crypto space is not codified. These terms are conventions that do not have legal significance. They are more for reference.
To have an even better understanding and for avoiding confusion, the terms private cryptocurrency for the Government’s definition and privacy coin for the crypto space’s definition.
As per the report of the Inter-ministerial Committee (IMC) on cryptocurrency, the term private cryptocurrency refers to any currency which is issued by a non-sovereign or private entity.
As per the former Finance Secretary of India, Mr. Subhash Chandra Garg who also chaired the Inter-Ministerial Committee (IMC), issuing a currency is the exclusive right of a sovereign (supreme ruler) entity which is the Government of a territory.
This definition does not care whether the transaction data is open or private.
It only cares about who is the issuer of the currency.
If the issuer is a private entity, the currency will be called a private cryptocurrency in India.
On the other hand, if the issuer of a currency is a sovereign, it will be considered as a recognized foreign currency or legal tender (in the case of INR).
At the other end of the debate lie privacy coins. These cryptocurrencies are known for their privacy protecting qualities. Their blockchains do not share the data of the transacting entities.
To ensure this, they use special mathematical and cryptographic techniques, keeping the identities of the transacting parties anonymous.
Bitcoin blockchain provides pseudonymity. It means any person can check a wallet address’ transaction history and balance.
Contrary to that, Monero, which is a privacy coin, anonymizes everything to protect users’ identity.
Since all these cryptocurrencies, regardless of their anonymous or pseudonymous nature, are issued by a private entity, the Government of India will consider them as ‘private cryptocurrency’ as described in the previous section. So, they will not be considered as legal tender or a recognized currency.