As the Center prepares the cryptocurrency bill for the monsoon session of Parliament, here’s what you need to know
The government has talked about banning all cryptocurrencies in India, but that hasn’t stopped millions of Indians from trading the digital asset
Having narrowly missed being tabled in the budget session of Parliament earlier this year, the cryptocurrency bill is reportedly ready for debate in the next monsoon session.
The government has talked about banning all cryptocurrencies in India, but that hasn’t stopped millions of Indians from trading the digital asset.
But uncertainty over its fate continues to scare investors even as the government has said it will create its own digital currency.
What does the crypto bill propose?
Finance Minister Nirmala Sitharaman said her team had done the heavy lifting on the bill with input from all stakeholders. The Cabinet note is ready and it only remains to be seen “when Cabinet can take it over and review it so that we can then move it,” she said. The Hindu.
In one bulletin for the budget session prepared by the Lok Sabha secretariat, the main objective of the bill has been described as “the creation of the official digital currency to be issued by the Reserve Bank of India”. It was also stated that the bill “seeks to ban all private cryptocurrencies in India”, although it allows “certain exceptions to promote the underlying technology of the cryptocurrency and its uses”.
Press Agency Reuters quoted an anonymous government source to report during the budget session, said the bill would represent “one of the toughest policies in the world against cryptocurrencies (and) criminalize the possession, issuance, l ‘mining, trading and transfer of crypto-assets.
He said that in such a case, investors would have a window to dispose of their crypto holdings, after which sanctions will be introduced.
But the same story noted that investors read encouragement in the finance minister’s comments when she said the government “was looking for ways to experiment in the digital and cryptocurrency world.” “I can only give you this clue that we are not closing our minds,” she said. CNBC-TV18, adding that “there will be a very calibrated position taken” on cryptocurrency.
What have been the rockers on crypto?
In his answer to a question in Parliament during the last budget session on the existence of a ban on “bitcoin trading in the country”, the Union finance ministry quoted a circular from the Reserve Bank of India (RBI) of April 2018 which had “advised all the entities regulated by it not to deal with” virtual currencies “.
However, he noted that the Supreme Court had in a 2020 judgment overturned the RBI circular. This means that Indian investors were able to trade cryptocurrencies.
But despite the Supreme Court’s order, several private and public banks have reportedly continued to discourage their clients from trading cryptocurrencies, citing the original RBI circular. This led the central bank to clarify last month that banks cannot cite this circular to deny services for cryptocurrency-related transactions.
“In view of the Supreme Court order, the circular is no longer valid as of the date of the Supreme Court judgment and therefore cannot be quoted or cited,” RBI said.
How big is the cryptocurrency market in India?
According to blockchain data firm Chainalysis, total cryptocurrency investments in India have jumped from $ 923 million in April 2020 to nearly $ 6.6 billion in May 2021, a jump of over 600%.
The same company said earlier in June that India ranked 18th among countries for total gains made from Bitcoin in 2020, with investors making a total of $ 241 million from their transactions in the largest and the most popular cryptocurrency.
Although clear figures are not available, nearly 1.5 crore of Indians have reportedly invested in cryptocurrencies.
Can cryptocurrency be legal tender in India?
El Salvador announced last month that it was making Bitcoin legal tender, the only country in the world to do so. The small Central American country of around 6.5 million people has no currency of its own and has been using the US dollar for domestic transactions since 2001.
However, experts noted that it may not be realistic for India to emulate El Salvador’s example.
“The Indian economy is a whole different ball game” when it comes to doing something similar. Sumit Gupta, CEO and the co-founder of CoinDCX said News18, adding that “although we would like the central bank to add Bitcoin to their treasuries, I continue to maintain that India should view and regulate crypto as an asset and not as a currency”.
But he noted that “crypto is a global phenomenon that is going nowhere.”
With the Center having said it was exploring its own digital currency, Gupta stressed that “countries that recognize that crypto assets present a paradigm shift for the future of global finance and embrace it will certainly gain in the long run. “.
RBI had said last year that it was “very much in the game” to conceive its own digital currency with reports suggesting he was focusing on the distributed ledger technology that is at the heart of cryptocurrencies like bitcoin.
A survey by the Bank for International Settlements found that about 80% of central banks surveyed had initiated projects involving some form of central bank digital currency (CBDC).