In a country like India, an ample amount of retail investors, business institutions, and politicians invest in cryptocurrency. However, there is no legitimate rulebook to regulate this versatile, volatile digital coin. For the last few years, a draft of the cryptocurrency bill is being prepared by the finance minister and an appointed committee of financial and market experts along with lawmakers. At Lok Sabha (the lower house of the Indian Parliament, and the platform where essential bills are debated upon) meeting was held, where questions were replied to regarding the status of cryptocurrency trading in India, provisions to regulate it, and investor protection schemes.
State Minister of The Ministry of Finance Answers
Referring to a document titled ‘Government of India, Ministry of Finance; Lok Sabha Unstarred Questions No. 2138’. The questions were authored by Dr. Sashi Tharoor (a renowned politician, former international diplomat, and prestigious author).
On Monday, August 2, 2021 ‘Question No. 2138’ was answered in the meeting held at Lok Sabha by Minister of State in the Ministry of Finance Shri Pankaj Chaudhary. There were six questions in a total of which answers were expected in the session.
The first question was regarding “the status of cryptocurrency trading in India”, to which the respected Ministry of Finance replied saying, “this information is not collected by the Government”
Next, clarification was sought regarding the “current regulatory regime surrounding cryptocurrency and its trading”. To this, the minister replied, “Currently, all entities regulated by the Reserve Bank of India (RBI) [ the central bank of India] have been advised to carry out customer due to diligence processes in line with regulations governing standards for Know Your Customer (KYC), Anti-Money Laundering (AML), Combating of Financing of Terrorism (CFT) and obligations of regulated entities under Prevention of Money Laundering Act, (PMLA), 2002 in addition to ensuring compliance with relevant provisions under Foreign Exchange Management Act (FEMA) for overseas remittances.”
The Ministry of Finance was asked to state “the laws in place to protect trader and investors in cryptocurrency from fraud and other misdemeanors in its trading.” To which Sri Pankaj Chaudhury was obliged to mention that laws were effective “depending upon the nature of the fraud, various laws including the Indian Penal Code 1860, are in place for protection against fraud.”
After attaining a clear picture of India’s stance on the status of cryptocurrency trading and investor protection schemes, the probing statements were directed towards the regulations of cryptocurrency.
The question quoted from the official document itself was addressed to the ministry seeking “whether the Government intends to introduce regulations specific to cryptocurrency trading in India?” and adds on to this, “if so, the status, therefore; and the protection for investors that the same will involve?”
In response, Sri Pankaj Chaudhury said, “It was announced in the Budget Speech for 2018-19 that “The Government does not consider crypto-currencies legal tender or coin and will take all measures to eliminate the use of these crypto-assets in financing illegitimate activities or as part of the payment system. The Government will explore the use of blockchain technology proactively for ushering in the digital economy.” A High-Level Inter-Ministerial Committee (IMC) constituted under the Chairmanship of Secretary (Economic Affairs) to study the issues related to VCs and propose specific actions to be taken in this matter recommended in its report that all private cryptocurrencies, except any cryptocurrency issued by the State, be prohibited in India. The Government would decide on the recommendations of the IMC and the legislative proposal, if any, would be introduced in the Parliament following the due process.”
Hereby, as readers and spectators after being aware of the statements made to clarify India’s stance on cryptocurrency, we can infer that India will most probably join its adjoining South Asian polities into cryptocurrency crackdown system. However, it seems that India will launch Central Bank Digital Currency (CBDC) to centralize the digital asset and promote the digital economy in the coming future.