Cryptocurrency bill, the much-awaited legislation to regulate virtual currency in India, is expected to be taken up by the Union Cabinet soon. A high-level committee headed by the secretary (economic affairs) had already submitted the report on cryptocurrency. The central government had earlier formed the panel to study the issues related to digital currencies and propose specific actions regarding the crypto coins. “Cabinet note is ready on cryptocurrency (bill). I am awaiting Cabinet to clear that,” finance minister Nirmala Sitharaman said on Monday.
The proposed bill narrowly missed out on being tabled during the Monsoon Session of the Parliament. Cryptocurrency bill’s key purpose will be the “creation of the official digital currency to be issued by the Reserve Bank of India,” according to the bulletin for the Budget Session prepared by the Lok Sabha Secretariat. The bill also “seeks to prohibit all private cryptocurrencies in India” but it would permit “certain exceptions to promote the underlying technology of crytptocurrency and its uses,” the bulletin mentioned. The inter-ministerial panel has recommended that all private cryptocurrencies, except any virtual currencies issued by state, will be prohibited in India, according to reports.
Blanket Ban or an Asset Class? What Govt Says on Cryptocurrency
Earlier in May, finance minister had said that a very calibrated position will be taken on crypto and digital currency as the world is moving rapidly with technology. There have been reports that bitcoin and other cryptocurrencies may be allowed as an asset class in India.
However the central government will not accept cryptocurrency as legal tender any time soon. The Centra has reiterated time and again that it does not consider cryptocurrencies legal tender or coin. During Budget 2018-19, the Union government had said that it will “take all measures to eliminate use of these crypto assets in financing illegitimate activities or as part of the payment system.”
Reserve Bank of India on Cryptocurrency
In April 2018, the Reserve Bank of India (RBI) had “advised all the entities regulated by it not to deal in” digital currencies. Later in 2020, the Supreme Court set aside the central bank’s 2018 circular and allowed banks and financial institutions from providing services related to cryptocurrencies. RBI had announced in May, 2021 that banks would be permitted to facilitate cryptocurrency trades after Supreme Court ruling.
The RBI has concerns on the cryptocurrencies traded in the market and has conveyed the same to the government. On cryptocurrency, there are no differences between the central bank and the finance ministry, RBI Governor Shaktikanta Das had maintained. “We should now await the final decision on the matter from the Centre,” he added.
Crypto Craze in India
Indians have invested around $ 6.6 billion in cryptocurrencies till May 2021, according to an Analytics Insight report. This saw a over 600 per cent jump from $923 million in April 2020. Nearly 1.5 crore Indians are said to have invested in cryptocurrencies. At present, over 350 startups operate in the blockchain and cryptocurrency space. Considering the huge interest from the investors and rapidly grown cryptocurrency market, the government is taking a cautious approach towards cryptocurrencies.
“We are happy to see that the government is pushing for crypto legislation. However, we don’t know the final elements of the bill and what it entails for the crypto community and companies in India. Emerging technologies like Blockchain and cryptocurrency, AI and ML hold the key for future economic development. With our large tech-savvy populace, we are ideally positioned to embrace, develop and pioneer the tech space,” said Nischal Shetty, chief executive officer, WazirX.
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