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New cryptocurrency bill not the same as one in February, finance minister tells Parliament

Rumours of government legislation banning cryptocurrencies had stirred panic among investors in India.

The Union government is not considering a ban on ads by cryptocurrency exchanges, for the time being, Finance Minister Nirmala Sitharaman clarified in response to questions by Rajya Sabha MPs Neeraj Shekhar and Sushil Kumar Modi. These questions were asked during the question hour in the winter session of the Parliament.

Sitharaman, however, elaborated that the government is studying guidelines of the Advertising Standards Council of India (ASCI) and their regulations so that the government can take a decision on how to handle these ads if the necessity arises in the future. She revealed that the Union government is also taking steps to caution investors through SEBI and RBI about the risks associated with cryptocurrencies.

It was reported earlier that the government was unhappy with crypto ads promising wild profits in a memo summarising a meeting between Prime Minister Narendra Modi and industry stakeholders. Crypto exchanges had agreed to put a stop to such ads then which is still in place. There was speculation that active solicitation by companies including exchanges and platforms would be barred in the bill.

The finance minister’s comments put to rest speculation about a possible ban on ads by crypto exchanges. They also indicate that the government is aware of the risks associated with the volatility of crypto assets and plans to address them in the upcoming bill.

Has FM signalled that an outright crypto ban is not on the cards?

Sitharaman affirmed that the government has every intention of introducing a crypto bill in the winter session after a Rajya Sabha member pointed out that the government had listed a crypto bill for the budget session this year but never introduced it.

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The explanation by the Finance Minister suggested that the government had intended to introduce the crypto bill earlier but it was forced to consider “other dimensions” and which is why they are now working on a new bill and it will not be “same”.

She then cleared the air on the crypto bill listed in the Lok Sabha bulletin this winter session which set off panic in the Indian crypto market. She said that it was an old bill and that the government is bringing a new cryptocurrency bill which will be presented before the Cabinet soon.

What caused the panic?

The Union government listed the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, for introduction before the start of the winter session of the Parliament. On the Lok Sabha agenda, the purpose of the bill was unchanged from when it was earlier listed in February this year:

To create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India. The Bill 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. (emphasis ours)

The unchanged description caused many crypto investors in India to panic and sell off their crypto holdings, owing to which prices of all major cryptocurrencies have plummeted after the agenda was circulated on social media.

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