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Government to bring bill to ban cryptocurrencies, push RBI's digital currency

Highlights Govt lists 'The Farm Laws Repeal Bill, 2021' to be taken up during winter session Currently, there is no regulation or any ban on use of cryptocurrencies in country PM Modi, earlier this month, held meeting on cryptocurrencies with senior officials

The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, is listed for introduction in Parliament in the upcoming Winter Session. The bill seeks to "create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India. It 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", as per the bill listed for introduction on the Lok Sabha website.

Currently, there is no regulation or any ban on the use of cryptocurrencies in the country. Against this backdrop, Prime Minister Narendra Modi, earlier this month, held a meeting on cryptocurrencies with senior officials, and indications are that strong regulatory steps could be taken to deal with the issue.

Recently, there have been a rising number of advertisements, featuring even film stars, promising easy and high returns on investments in cryptocurrencies in recent times, amid concerns over such currencies being allegedly used for luring investors with misleading claims.

Last week, the Standing Committee on Finance, chaired by BJP member Jayant Sinha, met the representatives of crypto exchanges, blockchain and Crypto Assets Council (BACC), among others, and arrived at a conclusion that cryptocurrencies should not be banned, but it should be regulated.

The Reserve Bank of India has repeatedly reiterated its strong views against cryptocurrencies, saying they pose serious threats to the macroeconomic and financial stability of the country and also doubted the number of investors trading on them and their claimed market value.

RBI Governor Shaktikanta Das too had earlier this month had reiterated his views against allowing cryptocurrencies, saying they are a serious threat to any financial system since they are unregulated by central banks. The RBI had announced its intent to come out with an official digital currency in the face of the proliferation of cryptocurrencies like Bitcoin, about which the central bank has had many concerns.

Hitesh Malviya, founder, itsblockchain.com, said, that investors should avoid panic sell and adopt a wait and watch policy for the regulation bill to be passed in the Winter Session to get an idea about the future of crypto investing. “There has to be a dedicated framework… it should be designed for crypto investing so that every citizen should be in the same loop when it comes to paying taxes on crypto gains,” Hitesh said.

Private digital currencies/virtual currencies/ cryptocurrencies have gained popularity in the past decade or so. Here, regulators and governments have been sceptical about these currencies and are apprehensive about the associated risks.

It can be noted that on March 4, 2021, the Supreme Court had set aside an RBI circular of April 6, 2018, prohibiting banks and entities regulated by it from providing services in relation to virtual currencies. The winter session of the Parliament will conclude on December 23.

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With globalisation and ethnic blurring, the term ‘occasion’ has also gone far beyond the traditional festivities to encompass a wider range of events. “So even if it is not the wedding season or family celebrations, it is the white-tie and black-tie occasions, Sunday brunches, and vacations that encourage people to opt for new looks,” says Singh.

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