Traders and investors have said that the Indian government's plans for a new bill banning most private cryptocurrencies has triggered heavy selling in the country's digital currency exchanges, as investors sought to exit positions despite the losses.

According to a legislative agenda announced late Tuesday for the upcoming winter session of Parliament, the government would only allow specific cryptocurrencies to promote the underlying technology and its applications.

If passed, the bill will effectively prohibit Indian citizens from transacting in most cryptocurrencies.

Following news of the bill, the dollar-linked stable coin tether (USDT) fell 25% to almost 60 rupees ($0.8061), according to cryptocurrency investor Naimish Sanghvi.

Bitcoin and Other Cryptos Tank Over 20% In India Amid Panic Selling Over Crypto Bill Confusion

As a result of the strong selling, a second crypto investor stated the value of his portfolio had decreased to around 22,000 rupees from 34,000 rupees. "I'm thinking about selling since the future is so uncertain," said the investor.

According to cryptocurrency traders, several exchanges were experiencing deposit and withdrawal issues as a result of the high volume of selling.

WazirX, one of India's largest cryptocurrency exchanges, had previously said that it was looking into claims that its app and website were experiencing delays. Later, it stated that the problem had been fixed.

According to industry estimates, India has 15 million to 20 million cryptocurrency investors, with total crypto holdings of roughly 400 billion rupees.