New Delhi: The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, known colloquially as the Cryptocurrency Bill, might not be introduced in the current Winter Session of Parliament, which is set to end in a week.
The bill is also yet to be cleared by the Union Cabinet.
“A bill on cryptocurrency and regulation of official digital currency is under finalisation for consideration of the cabinet,” Pankaj Chaudhary, Minister of State for Finance, had told the Lok Sabha Monday.
Sources in the finance ministry indicated to ThePrint that the government does not want to rush the introduction of the bill, given its wide ramifications, and take some more time to align it with an international framework.
“The prime minister has already said that efforts have to be made to come up with global norms on cryptocurrencies. The session is coming to an end next week too. So this will take time,” a senior government official said on the condition of anonymity.
At the ‘Summit for Democracy’ organised by the United States last week, PM Narendra Modi had stated that world leaders must jointly shape global norms for emerging technologies like social media and crypto-currencies, so that they are used to empower democracy, not undermine it.
Currently, there is a regulatory vacuum on the legality of cryptocurrencies. The Supreme Court had, in March 2020, struck down a Reserve Bank of India (RBI) circular barring regulated entities from providing services to those dealing in cryptocurrency related businesses.
A need for regulation
The need for regulation of private cryptocurrencies has risen as the size of the market investing in them is increasing, but the market itself remains unregulated.
While the government does not collect data on transactions in digital currencies in India, various estimates have pegged the market size at around $75 million in 2020-21.
Last month, PM Modi had chaired a comprehensive meeting on the way forward for issues related to investments in private cryptocurrencies. According to sources, he said that unregulated cryptocurrencies cannot be allowed to be used for money laundering and terror financing in India.
“It is a sensitive issue and requires in-depth consultation. There is a need to study the matter and take expert opinion. All this requires time, and hence, it is very unlikely to be taken up in the Winter Session,” said another government official on the condition of anonymity.
RBI Governor Shaktikanta Das has, on multiple occasions, expressed his reservations about providing legality to private cryptocurrencies, saying they are a serious threat to any financial system since they are unregulated by central banks.
Some of the issues, according to government sources, that are yet to be resolved include whether the government needs to ban all private cryptocurrencies or regulate the market and allow investment in private cryptocurrencies that meet government guidelines.
A panel set up by the government in 2017, headed by then-economic affairs secretary Subhash Chandra Garg, had recommended a complete ban on private cryptocurrencies.
On Monday, the finance ministry informed the Lok Sabha that there are eight cryptocurrency-related fraud cases that are under investigation by the Enforcement Directorate.
Another sticking point is the taxation of cryptocurrency transactions. The government is yet to take a call on the contours of the applicability of tax on capital gains made from investments in these coins, the first official quoted above said.
Listing bill doesn’t guarantee it will be introduced
The Cryptocurrency Bill has been listed for consideration and passing in the Winter Session of Parliament, but the second official quoted above said mere listing does not guarantee that it will be introduced.
“It was listed under the legislative agenda of the Lok Sabha but that alone doesn’t guarantee that it would be introduced in the session. In the past also there have been many cases where bills get listed but aren’t introduced for some reason or the other,” the official added.
(Edited by Gitanjali Das)