Indian CryptoBill Set to Feature in Monsoon Session of the Parliament – The Journey so Far

According to an Analytics Insight study, Indians have invested around Rs. 49,189 crore (US$ 6.6 billion) in cryptocurrencies through May 2021, compared to US$ 923 million through April 2020, a jump of almost 6,600 percent or 6.6x. This is evident of the fact that the nation is seeing a growing demand for cryptocurrencies. Meanwhile, reports have surfaced stating that the Cryptocurrency Bill is ready for debate during the upcoming Monsoon session.

During the Monsoon session, which begins on July 19, the government is expected to propose the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 in Parliament. Nirmala Sitharaman, Union Finance Minister, said last week that much work has been done on the bill and the Cabinet note is ready. She went on to say that the views, thoughts, and comments of stakeholders had been taken into consideration.

“We have to see when the Cabinet can take it up and consider it so that then we can move it,”she told The Hindu.

The minister also underlined that a window will be open for fintech, experimentation, and pilot initiatives, but that the ultimate decision will be made by the Cabinet. Meanwhile, Union Parliamentary Affairs Minister Pralhad Joshi had previously stated that during the Monsoon session, around 20 legislation, including five ordinances, will be introduced.

So what is the Bill proposing?

The Bill’s main objective was defined as “creation of the official digital currency to be issued by the Reserve Bank of India” in a bulletin produced by the Lok Sabha Secretariat for the Budget Session. Additionally, the Bill “seeks to prohibit all private cryptocurrencies in India,” while allowing “certain exceptions to promote the underlying technology of cryptocurrency and its uses.”

However, a Reuters report cited an anonymous government source who stated that the Bill would constitute “one of the world’s strictest policies against cryptocurrencies (and) would criminalize the possession, issuance, mining, trading, and transferring of crypto-assets.” It stated that in such a case, investors would be granted a window to liquidate their crypto holdings before facing fines.

Did RBI go Crypto?

During the previous Budget session, when the finance ministry was asked if a “Bitcoin trading ban” was in place, it responded by citing an RBI circular from April 2018 that said all entities regulated by the central bank are asked not to deal in virtual currencies. However, it highlighted that the Supreme Court had overturned the RBI circular in a 2020 decision. This has enabled Indian investors to trade in cryptocurrencies.

Nevertheless, as noted, some private and public banks still refused to serve clients who want to transact in cryptocurrencies, even after the apex court issued a fresh judgment reaffirming the central bank’s position. That drew the central bank to clarify last month that banks may not reject services to cryptocurrency-related operations on the basis of that circular.

“In view of the order of the Hon’ble Supreme Court, the circular is no longer valid from the date of the Supreme Court judgement, and therefore cannot be cited or quoted from,” RBI said.

Meanwhile, it must be noted lasted year RBI said it was “very much in the game” to devise its own digital currency with reports suggesting that its focus was on the distributed ledger technology that is at the heart of cryptocurrencies like bitcoin.

While it is unknown where cryptocurrencies stand in the central bank’s book, but it is highly likely that the RBI would follow in the footsteps of other central banks, creating its own CBDC.

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