The government’s proposed cyrpto-currency legislation will adopt a calibrated approach in order to allow innovation and experimentation in the space, even if there is a national digital currency.”We are not closing our minds, we are certainly look at ways in which experimentations can happen in the digital world and crypto-currencies,” Finance Minister Nirmala Sitharaman told CNBC TV-18 in an interview last week.
Sitharaman said that globally, there is no clear approach towards crypto-currency regulations. However, with the world moving fast with technology, India should not stand to lose out, she said..
“A lot of negotiations and discussions are happening with the Reserve Bank of India, because the Supreme Court order is very clear that the government has to take a call on the matter. Obviously, the RBI will take a call on what type of official crypto-currency will be planned and regulated. But also we wnat to make sure there is a window available for all kinds of experiments which will have to take place in the crypto world. Therefore, it is not like we are going to look inwards. There will be a very calibrated position taken”—Finance Minister Nirmala Sitharaman
Over the last month the crypto-currency industry in India has been thrown into a tizzy, ever since the government said it would introduce a new law which would ban “private” crypto-currencies. The government announced that it would introduce The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, which will ban “private” crypto-currencies while at the same time providing the RBI with the requisite legal powers to develop a central bank-backed digital currency (CBDC), according to an official Lok Sabha Bulletin Part II for the Budget Session 2021 of Parliament.
Addressing an event organised by the Entrepreneurs’ Organisation-Punjab Chapter on Saturday, Minister of State for Finance Anurag Thakur said that the government was keen to evaluate, explore and encourage new ideas with regards to blockchain and crypto-currencies. “The government would take a decision (about cryptocurrency) on the recommendations of the committee and the legislative proposal, if any, would be introduced in the Parliament following the due process. I welcome your suggestions and views on this issue,” Thakur said.
While the government wants to promote the use of blockchain across various use cases, it has decided to enter the global race of creating a Central Bank Digital Currency (CBDC) while at the same time banning “private” crypto-currencies. This is similar to the model pursued in China.
Despite routine consultation with the cryptocurrency and blockchain industry over the last year, industry insiders say that the government seems to have drawn the incorrect conclusion that crypto-assets need to be banned for a digital currency to simultaneously exist, as both can exist together and drawing a distinction creates necessary conflict. However, they also believe that the future of cryptocurrency investments in India remains intact, and that it is likely that the CBDC route is one way to make the crypto-asset or currency universe more legitimate and transparent for regulators.
MediaNama had earlier reported that the government plans to give existing investors a window of three to six months to square their holdings, as part of the Crypto Bill which is being worked on and will be sent to the Cabinet soon for approval. Last week, the government said that it would levy Income Tax and Goods and Services Tax (GST) on commissions and trading gains made from trading Bitcoins and other crypto-currencies. Further, the Securities and Exchange Board of India (SEBI) has also said that promoters of entities should sell any cryptocurrency holdings they may have prior to listing their companies on stock exchanges.
MediaNama has prepared a guide on crypto-currency regulations in India, listing the government’s position over the last few years and various policy recommendations; read it here: A complete low-down on crypto-currency regulation in India.
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