India: Finance Minister’s take on Crypto bill

In the present Budget session in Parliament, the central government has finally disclosed that it would introduce a new bill on cryptocurrencies (The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021). An inter-ministerial committee (IMC) has recommended that private cryptocurrencies, such as Bitcoin, be banned in India, according to Finance Minister Nirmala Sitharaman. The same group has also advocated for the establishment of an official digital currency and the Reserve Bank of India will be its controller

“A high-level Inter-Ministerial Committee (IMC) constituted under the Chairmanship of Secretary (Economic Affairs) to study the issues related to virtual currencies and propose specific actions to be taken in the matter recommended in its report that all private cryptocurrencies, except any virtual currencies issued by the state, will be prohibited in India,” FM Sitharaman declared in the Rajya Sabha on 9th February 2021.

Meanwhile, in Parliament, Minister of State for Finance Anurag Thakur stated that the government will introduce a bill on cryptocurrencies since the current rules are insufficient to deal with the challenges surrounding cryptocurrency.

It should be mentioned that in 2018, the Reserve Bank of India (RBI) prohibited banks from processing cryptocurrency transactions. The prohibition was removed by the Supreme Court on March 4, 2020, in a decision. Since then, the country has started using cryptocurrencies.

The Reserve Bank of India has now confirmed that it is working on a digital version of the rupee, with findings coming soon. According to the bill’s description, it aimed to “create a facilitative framework for the creation of the digital currency to be issued by the Reserve Bank of India”.

According to analysts, the new cryptocurrency bill may have an influence on certain institutional shareholders who have been investing in private digital currencies such as bitcoin in the nation. It is because, if the Centre follows the Inter-Ministerial Committee’s (IMC) proposal, private cryptocurrencies would be prohibited in the nation, resulting in a loss for the country’s current crypto investors. However, it is unclear if Bitcoin or Ethereum would be included in the new legislation’s list of prohibited private currency. There is also speculation that the planned cryptocurrency bill will allow holders of such currencies to quit the asset class before it is banned, but that the conversion to a legal asset will be subject to a hefty penalty.

Because the bill’s details aren’t yet public, there’s a lot of uncertainty about whether or not individuals who own Bitcoins or other cryptocurrencies should sell them. Approximately according to official estimates, cryptocurrencies worth more than $1 billion are owned by seventy lakh Indians.