Stating that a Bill on Cryptocurrency and Regulation of Official Digital Currency will be introduced in the Lok Sabha, the government on Tuesday said the question of monitoring cryptocurrency transactions, if any, or regulating cryptocurrency transactions, is consequent to the passage of the Bill in Parliament.
Also, cryptocurrencies are unregulated in India and that the government does not collect data on transactions in crypto currency, was the answer to a question raised during question hour in the Rajya Sabha.
Answering the supplementary questions in person, Finance Minister Nirmala Sitharaman and MoS Finance Bhagwat Karad explained at length the government’s position, with simultaneously assuring that the Bill to be tabled soon will take care of all the apprehensions that the Members had.
Swapan Das Gupta asked if an outright ban would be desirable or would it be far better to regulate it because we do not know how better the crypto currencies will be moving in future as it is still very much work in progress?
He suggested this as it will be better to influence the course of the crypto currency by putting in regulations as has been done by several countries, Germany being one of them.
Former RBI chief economist Dr. Narendra Jadhav spoke about the misleading advertisements regarding the potential of big profits by investing in private crypto currencies such as Bitcoins, which the younger generation is increasingly finding more and more tempting and also mentioned that private crypto currencies are being used for money laundering, terror financing and even drug trafficking.
“Pending the passage of the bill, which is expected to ban private currencies, private crypto currencies, is there any plan of the government, to create awareness about the ill-effects of the private crypto currencies?”
BJP MP Neeraj Shekhar sought to know if the government is making any attempt to tell Indians that this is not a safe investment option and that they can suffer financial losses.
Allaying fears, Sitharaman said, “Till the time Bill is a reality, attempts have been made through SEBI, through RBI and through government of India, to say that this is a risky area and the people going in there have to be conscious about what they are doing. This is an area not yet in a complete regulatory framework.”
“Alert, awareness has been raised, maybe we can do more,” she said.
Biju Janata Dal’s Amar Patnaik drew attention to the fact that the Inter-Minister Committee was set up on November 2, 2017.
It gave its report in February 2019.
“The context and the growth of the crypto currency took place in the last three years, which is about 10 times, so this report’s relevance may not be there,” he said.
Sitharaman said the issues pertaining to regulatory capacity and the fact that it has been proliferating in the last two-three years, are well taken note of and “I can go only that far to say that we have had extensive discussions.”
The report that both referred to was from a study conducted by the government through a research firm on “Virtual Currencies: An Analysis of the Legal Framework and Recommendations for Regulation” in July, 2017.
Thereafter, the government constituted an Inter-ministerial Committee (IMC) on November 2, 2017 under the Chairmanship of Secretary (Economic Affairs) to study the issues related to Virtual Currencies and propose specific action to be taken in this matter.
The Committee had submitted its report in February 2019 and recommended that all private crypto currencies be prohibited in India. It had also recommended that it would be advisable to have an open mind regarding the introduction of an official digital currency in India.
She also said there is no plan to stop advertisements (promoting crypto currencies) as at now but we are taking steps to issue caution, alert to the youngsters about the risks involved.
“The issues are with the Advertisements Council of India, where the guidelines are being studied and regulations are looked into so that if necessary, some kind of a decision how to handle this can be taken.”
For all the different variations of the questions regarding caution and bans, the Finance Minister — stating that the Bill will be tabled soon, without mentioning any time frame, said, “Any answer that I give now, will pre-empt the discussion when the government comes with the Bill with all its nuances. Kindly, permit me to not go beyond this.”