In the absence of clarity over who would regulate trade and investment in the digital currency space, it is unlikely that the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 would be tabled in the ongoing Winter Session of Parliament.
“There are still problem areas that need to be fine-tuned—key being whose mandate regulating the sector would be, how to tax investment and trading and some such. It would take time to fix these. Winter Session (tabling of the Bill) looks unlikely at the moment,” a senior government official says.
The Bill, which attempts to develop a facilitative framework to launch India’s official digital currency that would be issued by the Reserve Bank of India (RBI), also awaits the Cabinet nod. The RBI is expected to soon launch a pilot project for the official digital currency. In October 2021, the government had received a proposal from the RBI to amend the Reserve Bank of India Act, 1934. It aims to enhance the scope of the definition of “banknote” to include currency in digital form. The RBI is examining the use cases and working out a phased implementation strategy for the introduction of central bank digital currencies (CBDCs).
The official says that the Cryptocurrency Bill could not be rushed through as it is a new domain and international norms have to be studied in depth to align Indian norms with them. “It has already been saying before that the government is not against new technology. But it has to be made fool-proof so that people don’t fall into trouble. There is no hurry,” the official says.
The government has made it clear in the ongoing Winter Session of the Parliament that it has no plans to boost the cryptocurrency sector in India. Minister of State for Finance Pankaj Chaudhary recently said in the Parliament that the government does not collect any data related to cryptocurrency as it is unregulated in India.
The notification that the government had earlier issued regarding the introduction of the Bill in the Winter Session stated that the Bill seeks to “prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses”.
On November 13, Prime Minister Narendra Modi chaired a meeting to take stock of the regulatory prospects for cryptocurrencies. The meeting was attended by top officials of the RBI, Finance Ministry and Home Ministry and concluded that the ‘attempts to mislead the youth through overpromising and non-transparent advertising’ had to end. It was also noted that unregulated digital currency markets should not be allowed to become avenues for terror financing and money laundering.
At a recent meeting between the stakeholders and the Standing Committee on Finance, industry representatives decided on the need for regulation of the digital currency market but could not successfully respond to certain questions raised by parliamentarians.