India will introduce a legislation to regulate cryptocurrencies during the winter session of parliament that begins Nov. 29, sparking panic in the crypto market as traders speculated that the government will ban some—if not all—digital currencies.

Prices of major cryptocurrencies fell on Indian exchanges on the news. Bitcoin dropped by 17%, Ethereum by 15% and Tether by almost 18%.

The planned legislation comes after Reserve Bank of India (RIB) Governor Shaktikanta Das said earlier this month that he had “serious concerns” about cryptocurrencies impact on financial stability, alluding to hordes of small investors who were attracted by speculation in the asset.

The notification for the proposed bill, posted Tuesday on the lower house of parliament Lok Sabha’s website, seeks to prohibit all “private cryptocurrencies” in India, with exceptions to "promote the underlying technology and its uses." It also seeks to “create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India.”

But the government has not clarified the definition of “private cryptocurrencies” or the exceptions, and it is not known whether that term refers to crypto assets whose transactions cannot be tracked on crypto exchanges—or to cryptocurrencies in general.

Previous crypto bills

This is not the India’s first attempt to regulate the freewheeling crypto market.

Three years ago, the Reserve Bank of India (RBI), ordered financial institutions to break all ties with individuals and businesses dealing in cryptocurrency. But in March 2020, the Supreme Court derailed the plan, overturning the order because it violated the freedom of trade guaranteed by India’s Constitution.

Since then, however, retail banks have been reluctant to facilitate crypto transactions, despite the RBI revocation of its 2018 directive.

Earlier this year, Indian lawmakers were expected to revisit crypto regulation, with a bill that would have issued a complete ban on cryptocurrency and punish any violation with 10 years’ jail time or a fine—or both.

The proposed legislation was not taken up due to a lack of space on the legislative calendar, which gave crypto exchanges and digital currency professionals time to lobby for regulation of the sector instead of an outright ban.

The lobbying reportedly persuaded government officials to regulate rather than prohibit private digital currencies. But doubts have now resurfaced about the shape of the proposed legislation. Policymakers are reportedly again thinking of more stringent regulation of private cryptocurrencies.

Sowing doubt is the fact that the draft contents of the Cryptocurrency and Regulation of Official Digital Currency Bill 2021, as the legislation is known, have not yet been made public.

A panic reaction

With India having the second-largest number of crypto users worldwide, "this move looks like it will not only hurt individuals, but also larger businesses," says Anndy Lian, Chairman at BigONE Exchange for cryptocurrency.

India is estimated to have around 15 million crypto investors with a cumulative investment value of $6 billion.

Clarity on whether the new regulation proposes to ban most cryptocurrency will only be known when the bill is presented to parliament. And after the bill is introduced in parliament at the end of this month, it will likely be extensively debated and modified.

When parliament produces final regulations, however, legal analysts expect them to fall short of a full ban.

“Banning cryptos is a non-workable proposition from the word go because crypto is a global phenomenon. It cannot be banned,” said Pavan Duggal, a senior Supreme Court lawyer and a specialist in cyber laws and cryptocurrencies. “The better option would be to regulate in a legal framework and enabling manner.”

The proposed legislation on cryptocurrency is the first time that the Indian government “is seriously looking at the crypto ecosystem,” he added.

Much of today’s fear of a ban has been driven by the lack of clarity of what constitutes a “private cryptocurrency”, but according to Kumar Gaurav, founder and CEO of Cashaa, a company that finances the crypto industry, its prohibition won’t affect most people.

The term refers to digital assets that are used for financing drug trafficking and terrorism, not digital assets in general, says Gaurav.

“I am sure that what we’ve seen is a panic reaction to India’s bill. It will probably blow over in a couple of days,” he added.

This story was originally featured on Fortune.com