Minister of State for Finance and Corporate Affairs Anurag Thakur on Tuesday said regulatory bodies like Reserve Bank of India (RBI) and Securities and Exchange Board of India (Sebi) don't have a legal framework to directly regulate cryptocurrencies as they are neither currencies nor securities or commodities issued by an identifiable user.
The existing laws are inadequate to deal with the subject, which is why the government has formed an inter-ministerial panel, Thakur said in Parliament today. "This committee has submitted a report, following which there will be a meeting of the empowered technology group. The committee of secretaries has also given its report, and now the bill is being finalised before it's sent to the Cabinet," he added.
"We will be bringing the bill soon," Thakur said.
Globally, there are different definitions of cryptocurrencies, which have been adopted by international bodies, he said. "The RBI also took initiative and banned cryptocurrencies. Based on all this, reports were submitted and the government has prepared a bill, which will be tabled in Parliament soon," he added.
The minister's response came after several reports suggested that the Centre is planning to ban private cryptocurrencies, including Bitcoin, by introducing a bill in Parliament. Also, it is being said the Centre is planning to introduce an official digital currency of its own under the Reserve Bank of India.
The bill may allow the creation of government's own digital currency and banning of private players in India. However, the Centre may also allow certain exceptions to promote the underlying technology of cryptocurrency and its uses.
As the world's most popular cryptocurrency Bitcoin continues its rising streak (Bitcoin has touched $47,846.19 as per latest available data) there's enormous intrigue in digital currencies among people in India. However, banning the cryptocurrencies in the country could potentially destroy a lot of value for the general public, say experts.
Instead, they say the government should make cryptocurrencies interoperable with the current banking infrastructure.
The government has also recognised the huge potential of blockchain technology. A recent proposal put forward by the Central Economic Intelligence Bureau (CEIB), an arm of the Finance Ministry, says the government should impose 18 per cent GST on bitcoin transactions, which could help the Centre gain Rs 7,200 crore annually.
The RBI had virtually banned cryptocurrency trading in 2018 and had directed all entities regulated by it shall not deal in virtual currencies. The Supreme Court in 2019 had asked the government to come up with cryptocurrency regulation policies. In 2020, the apex court struck down the curbs imposed by the RBI on cryptocurrency trade in India.
Also read: India plans to bring law to ban cryptocurrencies, introduce official digital currency