In the Parliament winter session of 2021, the cryptocurrency bill presented with some surprises. At first, it sparked panic and chaos in investors, leading to the panic sale of 15-20 per cent. Tempus fugit, things are getting back into action. Let's see what are the recent announcements made so far.
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Nirmala Sitharaman Shares New Information Regarding the Cryptocurrency Bill
The Finance Minister, Nirmala Sitharaman on Tuesday, November 30, announced to introduce a new cryptocurrency bill in the Parliament after getting approved by the respective committee. In a reply to a question asked at the Rajya Sabha, the finance minister said, “There were other dimensions and the bill had to be reworked and now we are trying to work on a new Bill.” Some discussions need consideration for a better understanding of the regulatory capacity of cryptocurrencies. It is essential to wait for the fine copy to get presented at the Union Cabinet table.
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Key Things the Government Said on Cryptocurrency Bill
“The bill also seeks to prohibit all private cryptocurrencies in India. However, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses,” the Lok Sabha bulletin mentioned. Furthermore, the discussion furthered and the government said investors to eye on the following:
- “The Bill (cryptocurrency Bill) also seeks to prohibit all private cryptocurrencies in India. However, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses,” Nirmala Sitharaman said at the Rajya Sabha.
- “A Bill on Cryptocurrency and Regulation of Official Digital Currency for introduction in the Lok Sabha has been included in the Lok Sabha Bulletin-Part II as part of Government Business expected to be taken up during the Seventh Session of Seventeenth Lok Sabha, 2021. The question of monitoring cryptocurrency transactions, if any or regulating cryptocurrency transactions, if any is consequent to the passage of the Bill in Parliament,” the finance minister said.
- “There were other dimensions and the bill had to be reworked and now we are trying to work on a new bill,” Sitahraman quoted. She also warns people to safeguard themselves from fraudsters. The Reserve Bank of India is still vocal about banning cryptocurrency given its potential to jeopardise the macroeconomic condition of the country.
- “This is a risky area and not in a complete regulatory framework. No decision was taken on banning its advertisements. Steps are taken to create awareness through RBI and SEBI. The Government will soon introduce a Bill,” Sitharaman said.
- The question addressed by Sushil Modi government initiatives on the development of the separate framework, “At this point, I won’t be able to say if there will be a framework. But all these matters are being discussed.” the Finance Minister said.
- When asked how many people paid tax on cryptocurrency, the Finance Minister said, “I don’t have the information about how much tax has been collected on cryptocurrency.”
- “Central Bank Digital Currency (CBDC) is introduced by a Central Bank. Government has received a proposal from Reserve Bank of India (RBI) in October, 2021 for amendment to the Reserve Bank of India Act, 1934 to enhance the scope of the definition of ‘bank note’ to include currency in digital form.” said the Finance Minister.
- She further said, “Introduction of CBDC has the potential to provide significant benefits, such as reduced dependency on cash, higher seigniorage due to lower transaction costs, reduced settlement risk. Introduction of CBDC would also possibly lead to a more robust, efficient, trusted, regulated and legal tender-based payments option.”
- She also notified that the Enforcement Directorate is already looking at eight cryptocurrency fraud cases.
The other side of the coin has the same to say, but there is a catch.
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Former Fin Secy Says, "The Description on Banning Private Cryptocurrencies was a Mistake"
In an interview with Subhash Garg, the former finance secretary who drafted the Crypto Bill, let's know what has changed down the line from 2019 to date.
The question - "You were the one who drafted the original crypto bill in 2019. What do you think has changed from since then?"
He said the digital currency is a useful tool for humanity. In my opinion, private players must be allowed to issue currencies. But there are still a few addressable issues that we need to look at as a whole. Allowing one private entity for the issuance of currency, and someday another private entity will come with many more currencies.
If I say rightly, the Centre and Reserve Bank of India is worried much about this new phenomenon. You cannot allow cryptocurrency as a currency, and the 2019 drafted bill largely focuses on the same. However, the blockchain technology world is beyond cryptocurrency today. We need to understand all facets before designing the bill. Simply, confining it only to currencies will not prevail the justice.
Other questions in line were -
"The description of Crypto Bill which will be introduced during the winter session in the Lok Sabha, said private cryptos to be banned. Any word on what will be banned and what will be left out?"
The Former Finance Secretary Subhash Garg said - I think it was perhaps a mistake. The representative is not ready with the final copy of the bill and stating beforehand the ban of all private cryptocurrencies. It is ideal to discuss it with the stakeholders and crypto investors and then formulate a bill.
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It is necessary to take the decision keeping India's interest in mind. Cryptocurrency and the blockchain are emerging technology. No one as of now fully understands it. These holds enormous future potential and need to be discussed widely, before reaching the final decision.
"Is there a thinking about classifying cryptocurrency as an asset where it can be taxed like a commodity?"
It is another big mistake. Cryptocurrency is crypto assets, a crypto service, and it is the whole economy. You will not classify the wheat you produce or the clothes as assets. It is too much of an oversimplification considering it as an asset. He further said, I think such statements are coming from exchanges with limited interest, providing limited services. They are not the crypto world.
