Cryptocurrency Bill – All You Need to Know

The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, is on the agenda of the Indian government for the Winter Session of the Parliament beginning November 29, 2021, among the 26 new bills. The Crypto Bill 2021 would be introduced in the Parliament to ban all private cryptocurrencies in India while allowing certain exceptions for promoting the underlying technology of cryptocurrency and its uses.

The Crypto Bill aims at creating a facilitative framework for the creation of the official digital currency that will be issued by the Reserve Bank of India (RBI). Earlier in November 2021, PM Narendra Modi chaired a high-level meeting with officials from the RBI and several ministries to deliberate the way forward on Cryptocurrency in India wherein it was ascertained that unregulated crypto markets will not be allowed to be avenues for terror financing and money laundering.

Also read: China bans cryptocurrency – All you need to know

What is Cryptocurrency and Regulation of Official Digital Currency Bill, 2021?

The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, also known as the Crypto Bill, was a new bill on cryptocurrencies that suggested a ban on private cryptocurrencies in India and facilitate the creation of an official digital currency.

Purposes of Cryptocurrency Bill, 2021

As per the bulletin relating to Parliamentary affairs issued by the Lok Sabha, the key purposes of the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 are:

(i) to create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India.

(ii) to prohibit all private cryptocurrencies in India,

(iii) allow for certain exceptions to promote the underlying technology of cryptocurrency and its uses.

Indian government stance on cryptocurrencies

The Reserve Bank of India (RBI) on May 31, 2021, had announced that banks to allow cryptocurrency trades with routine due diligence measures on the same. The central bank had also nulled the circular issued in 2018 that asked banks to not facilitate cryptocurrencies exchanges.

However, the Indian government is yet to clarify its stance on cryptocurrencies. Sitharaman in Union Finance Minister Nirmala Sitharaman said the Indian government is looking at a ‘calibrated’ approach towards cryptocurrencies in India.

Cryptocurrency market in India

All crypto prices crashed by 15 per cent within hours of the announcement by the government to introduce the Crypto Bill in the Winter Session of the Parliament to ban all private cryptocurrencies in India.

As per the blockchain data company Chainalysis, India has witnessed a 641 per cent jump in total investment in cryptocurrencies from $923 million in April 2020 to $6.6 billion in May 2021. The company in June 2021 stated that India ranks 18th with total Bitcoin investment gains at $241 million.

Why was Cryptocurrency Bill, 2021 not listed for Monsoon or Budget session of Parliament?

The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, also known as the Crypto Bill, was not listed among the 23 bills in the tentative list of government legislative and financial business that was tabled in the Lok Sabha during the Monsoon Session of the Indian Parliament.

Earlier, the Crypto bill was expected to be taken up during the Budget session but could not be taken up as the session was curtailed due to the second wave of the COVID-19 pandemic.

The Ministry of Finance, the Reserve Bank of India (RBI), Indian banks, and stakeholders held further deliberations to take a holistic decision on cryptocurrency before introducing the bill in Parliament.

Though the RBI wants a ban on cryptocurrency, the government is not in the favour of an outright ban on cryptocurrency. Rather, the government is more likely to treat cryptocurrencies as a tradeable asset class with a market that can be traded and invested, as per government officials. The relative volatility of cryptocurrencies is among many concerns within the government.

Further, regulation of cryptocurrencies is not on the Centre’s economic agenda currently. As per policymakers, the cryptocurrency market is witnessing substantial investments, but the cryptocurrency market’s impact on the Indian economy is not much.

The Centre had 23 economic bills and amendments that took precedence in the Monsoon session of the Parliament. Some key bills included:

• Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021
• Coal Bearing Areas (Acquisition and Development) Amendment Bill, 2021
• Electricity (Amendment) Bill, 2021
• Chartered Accountants, the Cost and Works Accountants and the Company Secretaries (Amendment) Bill, 2021
• Trafficking of Persons (Prevention, Protection and Rehabilitation) Bill, 2021
• Limited Liability Partnership (Amendment) Bill, 2021
• Pension Fund Regulatory and Development Authority (Amendment) Bill, 2021
• Deposit Insurance and Credit Guarantee Corporation (Amendment) Bill, 2021
• RBI Petroleum and Minerals Pipelines (Amendment) Bill, 2021