Finance Ministry Clears Crypto Fuss By Saying The Govt Has No Plans To Boost The Sector

As India awaits the cryptocurrency bill, the Finance Ministry today (December 6th, 2021) said the government has no plan to boost the sector in the country.

Responding to questions in the Lok Sabha, Pankaj Chaudhary, the Minister of State for Finance reiterated that cryptocurrencies are currently unregulated in India.

The minister said that the cryptocurrency and regulation of official digital currency is expected to be taken up during the current session of the Lok Sabha.

Speaking on the bill, Finance Minister Nirmala Sitharaman too had said on Saturday that a “well consulted” bill is coming through and it will be tabled in the parliament, once the cabinet clears it.

Central Bank Digital Currency

Outlining the developments regarding a central bank digital currency, Chaudhary today said that the RBI in October sent a proposal to widen the definition of ‘bank note’ to include currency in digital form.

“Introduction of CBDC has the potential to provide significant benefits, such as reduced dependency of cash, higher seigniorage due to lower transaction costs, reduced settlement risk,” he said.

Although he observed that the CBDC may lead to a more robust, efficient, trusted, regulated and legal tender-based payments option, the minister added, “There are also associated risks which need to be carefully evaluated against the potential benefits.”

“As CBDC is backed by the central bank of a country, apart from other benefits, it will not have volatility which is normally associated with the private cryptocurrencies.”

The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 is scheduled to be tabled in the ongoing session of the Parliament. It seeks to create a facilitative framework for the creation of the official digital currency to be issued by the RBI.

Speaking at the Hindustan Times Leadership Summit on Saturday (December 4th, 2021), Finance Minister Sitharaman had said that there is a lot of speculation going on in the matter which is not healthy at all.

Concerns were fueled among the stakeholders as the description of the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, showed that it “seeks to prohibit all private cryptocurrencies in India. However, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses”.

No Data Related To Crypto With the Government

The government during this session of the parliament has told both the houses that it does not collect data on the cryptocurrency transactions and that there is no ready information on tax collected from investments made in the virtual asset.

Today also, in response to a question on the number of people who have invested or are using bitcoin in the country, the Minister of State responded that the government does not collect such data.

Recognition As An Asset

The government is expected to recognise cryptocurrencies as an asset class, and prohibit their usage as currency. 

An NDTV report last week said that the much awaited cryptocurrency bill will propose to bring crypto assets under the regulation of capital markets regulator SEBI.

Growing Crypto Market

India has more than one crore crypto investors, and the number is significantly growing every day, with several domestic and global crypto exchanges operating in the country.

The investment in cryptocurrencies grew from nearly $923 Mn in April last year to $6.6 Bn in May this year in India. According to a report released in August by blockchain data platform Chainalysis, India ranks second out of 154 nations in terms of cryptocurrency adoption.