New Delhi: The buzz around cryptocurrency was felt in the Rajya Sabha Tuesday as members posed a number of queries in the context of an upcoming Bill, which aims to prohibit private cryptocurrencies. However, Finance Minister Nirmala Sitharaman gave few concrete answers, urging the MPs to wait until the Bill is tabled in Parliament.
Some MPs raised questions on whether private crypto players ought to be banned, or if regulating crypto exchanges was the way to go. Others asked about possible regulations on advertisements by crypto players that may be “misleading” people into investing large sums of money in the yet-to-be-regulated cryptocurrency markets.
The Cryptocurrency and Regulation of Official Digital Currency Bill 2021 is listed to be tabled in Parliament during the ongoing winter session. It is expected to impose a ban on private cryptocurrencies, while the Reserve Bank of India (RBI) launches its own digital currency.
A discussion took place during Question Hour in the Rajya Sabha, with Finance Minister Sitharaman responding to questions on the Bill, what it may entail, and the government’s stance on cryptocurrency.
‘Youngsters unnerved by latest speculations’
Bharatiya Janata Party (BJP) MP Swapan Dasgupta said since cryptocurrency was a popular concept among young people, they were “unnerved by the latest speculations” that followed news of the Bill being listed for discussion. Dasgupta then asked if regulating the crypto-market would be a better bet than an “outright ban”.
“Will an outright ban be desirable? Or will it be far better to regulate it? We don’t know how cryptocurrency is moving in the future, it is a work in progress. Keeping that in mind, will it be better to influence the course of cryptocurrency from within the system? Which is the most preferable option without losing track of the larger question of hot money etc?” asked Dasgupta.
To this, Sitharaman said that answering the question on regulations and bans would be inappropriate given that the Bill will be discussed in Parliament.
“Any answer I give now will preempt the discussion when the government comes with its Bill,” said Sitharaman.
Regulation of crypto advertisements
Nominated MP Narendra Jadhav, Biju Janata Dal (BJD) MP Sujeet Kumar and BJP MP Sushil Modi raised questions on “misleading advertisements” in the media, which they claimed are enticing many to “invest crores” in private cryptocurrency.
Jadhav and Kumar further asked if the government was taking steps to spread awareness on the potential perils of investing in cryptocurrencies, given that these are being used for “terror financing”.
Jadhav said that the “younger generation” was finding cryptocurrencies “more and more tempting”, and added, “Private cryptocurrencies are being used for money laundering, terrorism financing and even drug trafficking. Pending the passage of the Bill, which is expected to ban private cryptocurrencies, is there any plan from the government to create awareness about the ill effects of private cryptocurrencies?”
In response, Sitharaman referred to several efforts to build awareness about the possible risks.
“Through SEBI (Securities and Exchange Board of India), RBI (Reserve Bank of India) and GoI (Government of India), statements have been issued and awareness-building attempts have been made to say that this (cryptocurrency) is a ‘risky area’,” she said.
She added, “We have said that the area is not yet within complete regulatory framework.” Referring to the RBI’s attempt to bring in regulation nearly two years ago, which was overturned by the Supreme Court (SC), she said, “In the SC, the matter was highlighted that in the absence of a policy by the government, regulation by the RBI might not be proper.”
As a supplementary question, BJP MP Sushil Modi asked if the government was planning to ban “misleading” advertisements by private crypto players.
“In the last four months, misleading ads on TV, print and social media have been promising heaven,” said Modi. “During the (ICC T20) World Cup, more than Rs 40 crore was spent by crypto exchange companies. Is the GoI thinking of banning advertisements that are misleading till the Bill comes out?” he asked.
In response, Sitharaman said, “The Advertising Standards Council of India guidelines are being studied and regulations being looked into. We will then take an informed position on how to handle this.”
Modi also asked the government if a policy framework, separate from the crypto Bill, would be formulated for non-fungible tokens (NFTs), another form of digital assets that are different from cryptocurrencies in that they are not interchangeable or “fungible”.
He asked if the government had data on income tax paid on cryptocurrency, and how much of this had been collected.
While Sitharaman said that the government did not have information on income tax collected, the matter of NFTs is “being discussed”.
‘What are we doing to increase regulatory capacity of monitoring agencies?’
BJD MP Amar Patnaik said that irrespective of whether cryptocurrencies are to be banned or regulated, the capacity of regulatory bodies will have to be increased either way.
“Even if you want to ban, regulatory capacity should be there to monitor that ban. What are we doing to increase the regulatory capacity of RBI or SEBI for different kinds of private or government CBDCs (Central Bank Digital Currencies)?” asked Patnaik.
Sitharaman replied that the issues related to regulatory capacities were “well taken” and “have been discussed” while framing the Bill. She said that the House should wait and discuss this once the Bill is introduced.
(Edited by Rohan Manoj)