Crypto Bill 2021: FinMin preparing Cabinet note for further discussions on official digital currency

Finance Ministry is preparing a Cabinet note for further discussions to create a regulatory regime for an official digital currency which will be issued by the Reserve Bank of India (RBI) and barring private cryptocurrencies. Another focal point of this note will be the obscurity of cryptocurrencies and how these can be used for terror funding and other illegal activities.

“Right now, I will only say that cryptocurrenices are not going to become a legal tender. The Indian Rupee is a legal tender, while gold and silver are not legal tenders. The rest will be decided in the bill,” Finance Secretary T V Somanathan told India Today.

The meeting between Prime Minister Narendra Modi, top Finance Ministry officials and officials from the Reserve Bank of India (RBI) set the tone for the crypto bill. During this meeting, the RBI submitted a report which underlined that there is not much knowledge about cryptocurrency.

The central bank also underscored that virtual currencies that do not have an underlying value are subject to extreme fluctuations and can prove to be roadblocks in managing money supply and inflation control. After the Prime Minister’s meeting on November 13, RBI Governor Shaktikanta Das called for “deeper, well-informed” discussions on the issue of cryptocurrency.

“The discussion which is now taking place in the public domain… there is a need for much deeper discussions. When the central bank says that we have serious concerns from the point of view of macroeconomic and financial stability, there are deeper issues involved… I am yet to see serious, well-informed discussion in the public space on these issues,” RBI Governor Shaktikanta Das said in his address at the SBI Banking and Economics Conclave.

Meanwhile, the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 will be discussed in the Winter Session of the Parliament, starting from November 29. This bill “seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology and its uses.”

The bill will also allow a facilitative framework for “the creation of the official digital currency to be issued by the Reserve Bank of India.” The RBI is all set to start a pilot programme for a central bank digital currency (CBDC) in December. The testing will comprise two points – scrutiny on security and impact on monetary policy.

(With inputs from Rahul Shrivastava)

Also read: Cryptocurrency ban in India will encourage non-state players, unlawful usage: BACC

Also read: Cryptocurrency won't be 'legal tender' by any means in India: Finance Secretary TV Somanathan