UPDATE ON AUG 19, 01:45 PM IST
Finance Minister Nirmala Sitharaman said that the cryptocurrency bill has been tabled before the Union Cabinet and is awaiting approval
The Indian government has been sitting on the fence for a long time over cryptocurrencies in the country. A much-awaited cryptocurrency bill in this regard has been tabled before the Union Cabinet and awaits its approval. Finance Minister Nirmala Sitharaman said on Monday that the cabinet note was ready on cryptocurrency (bill), and that she was awaiting Cabinet to clear that. Earlier, an inter-ministerial panel, headed by the Secretary (Economic Affairs), had submitted its report on cryptocurrency. Currently, cryptocurrencies are under no regulation in India, which makes it a grey area for Indian investors.
Cryptocurrency and legislation
The central government had formed the inter-ministerial panel on cryptocurrency in order to examine the issues related to digital currencies. According to reports, the panel recommended all private cryptocurrencies be prohibited in India. However, virtual currencies issued by the state may be allowed. During the Monsoon Session in the Parliament, the cryptocurrency bill was expected to be tabled but it did not happen.
According to the bulletin for the Budget Session prepared by the Lok Sabha Secretariat, the bill “seeks to prohibit all private cryptocurrencies in India”. But it allows a few exceptions in order to promote the technology behind cryptocurrencies and their uses.
The Reserve Bank of India and cryptocurrency
In April 2018, the Reserve Bank of India (RBI) brought out an advisory notice to “all the entities regulated by it not to deal in” cryptocurrency. However, in 2020, the Supreme Court lifted the central bank’s ban and allowed banks and financial institutions to provide services even if they were related to digital currencies.
In May 2021, the Deputy Governor of RBI said that they were considering ways to bring out a Central Bank Digital Currency (CBDC). The cryptocurrency bill could facilitate its coming.
Indian cryptocurrency investments
Cryptocurrencies are digital or virtual currencies that are growing popular among Indian investors. These currencies basically disrupt the central bank model of transaction and trading. Indians have invested over $6 million in cryptocurrencies. Almost 1.5 crore Indians are estimated to have made these investments. Several hundred startups have also started operating in the blockchain and cryptocurrency space.