Cryptocurrency to stay or not? Cabinet to take big decision soon

The Union Cabinet is likely to take up soon the much-awaited legislation on regulating virtual currency in the country. A committee, headed by the secretary (economic affairs), has already submitted the report on cryptocurrency, media reports indicate.

The government had earlier formed the panel to study the issues related to digital currencies and propose specific actions regarding crypto coins.

“A Cabinet note is ready on cryptocurrency (bill). I am awaiting Cabinet to clear that,” Finance Minister Nirmala Sitharaman said on August 16, reports News 18.

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The proposed Bill was to be introduced during the monsoon session of the Parliament but was held in abeyance due to government-Opposition face-off. The bill’s key purpose will be the “creation of the official digital currency to be issued by the Reserve Bank of India,” according to the bulletin for the budget session prepared by the Lok Sabha Secretariat.

The bill also “seeks to prohibit all private cryptocurrencies in India” but it would permit “certain exceptions to promote the underlying technology of cryptocurrency and its uses,” the bulletin said. The inter-ministerial panel has recommended that all private cryptocurrencies, except any virtual currencies issued by state, will be prohibited in India, media reports said.

Earlier in May, the Finance Minister had said that a calibrated position would be taken on crypto and digital currency as the world is moving rapidly with technology.

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However, the Centre will not accept cryptocurrency as a legal tender anytime soon. The Centre has reiterated time and again that it does not consider cryptocurrencies legal tender or coin. During Budget 2018-19, the Union government had said that it will “take all measures to eliminate the use of these crypto-assets in financing illegitimate activities or as part of the payment system.”

In April 2018, the RBI had advised all the entities regulated by it not to deal in digital currencies. Later in 2020, the Supreme Court set aside the Central bank’s 2018 circular and allowed banks and financial institutions from providing services related to cryptocurrencies. RBI had announced in May 2021 that banks would be permitted to facilitate cryptocurrency trades after the Supreme Court ruling.

Indians have invested around $ 6.6 billion in cryptocurrencies till May 2021, according to an Analytics Insight report. This saw an over 600 per cent jump from $923 million in April 2020. Nearly 1.5 crore Indians are said to have invested in cryptocurrencies. At present, over 350 startups operate in the blockchain and cryptocurrency space.