New Delhi: In a clear signal of the government's intent to discourage private cryptocurrencies in the country, the Centre on Monday clarified in the Lok Sabha, the lower house of Indian Parliament, that it has no plan to boost the cryptocurrency sector in the country. In response to a question, the government clarified that it would table a Bill to regulate cryptocurrency in the country in the ongoing winter session of the Parliament.
In response to a question by Jagdambika Pal, a BJP member and former Union minister, Pankaj Chaudhary, the minister of state in the ministry of finance clarified in the Lok Sabha that neither the government has taken any steps to promote cryptocurrencies in the country nor has it any plans to do so in future.
A categorical no from the government follows three crucial developments last month that made the government and the RBI's intent clear with regard to cryptocurrencies.
On November 11, Reserve Bank Governor Shakti Kanta Das sounded an alarm over the unregulated trading of cryptocurrencies in the country and called for a serious discussion to formulate a policy.
Two days later, Prime Minister Narendra Modi chaired a high-level meeting on November 13. Following the meeting, the government sources made it clear that it would crack down on the misleading advertisements that promote buying and selling of cryptocurrencies in the country.
In the meeting, officials also expressed concerns against potential misuse of cryptocurrency in terror funding and money laundering.
Also read: Centre to table bill to ban cryptocurrency: Reports
As if that was not enough, while addressing the Sydney Dialogue hosted by Australia, Prime Minister Narendra Modi urged the democracies to work together to ensure that cryptocurrencies did not spoil youth.
“Take crypto-currency or bitcoin for example. It is important that all democratic nations work together on this and ensure it does not end up in the wrong hands, which can spoil our youth," Prime Minister Modi said on November 18.
It was the first public statement by the Prime Minister Narendra Modi that revealed his government's thinking on cryptocurrencies.
These developments came at a time when cryptocurrencies such as Bitcoin were scaling all-time records as the combined market valuation of cryptocurrencies surpassed $3 trillion on November 9.
RBI opposes private cryptocurrencies
India's central bank has traditionally been against the cryptocurrencies over which it will have no control. Though the RBI is working on a digital currency of its own, it is not in favour of allowing private cryptocurrencies in the country that are risk prone and volatile by their very nature with no regulatory oversight.
In response to Jagdamibka Pal and Prajwal Revanna's question on cryptocurrency, the government clarified that at present the sector was not regulated in India and as a consequence it did not maintain any database about the crypto exchanges operating in the country.
Also read: Far deeper issues with cryptocurrencies, says RBI Governor
The finance ministry also clarified that it does not have any data about how many people are trading in cryptocurrencies in the country.
“Currently, cryptocurrencies are unregulated in India. The Government does not collect data on the cryptocurrency sector. A Bill on Cryptocurrency and Regulation of Official Digital Currency has been included for introduction in the Lok Sabha Bulletin-Part II as part of Government Business expected to be taken up during the Seventh Session of Seventeenth Lok Sabha, 2021,” Pankaj Chaudhary told the Lok Sabha.
Cryptocurrency sector in India
In absence of any regulatory law, crypto-currency exchanges operating in the country such as WazirX, CoinDCX, CoinSwitchKuber, UniCoin and BitBNS remain unregulated.
Also read: Crypto industry urges govt to take nuanced approach, asks investors to remain calm
Though the government has clarified in the Parliament that it does not have any plan to promote cryptocurrency sector in the country but the official sources had already clarified following the high-level meeting chaired by Prime Minister Modi that the Government was cognizant of the fact that blockchain based crypto-currencies were an evolving technology so the government would keep a close watch and take proactive steps.
According to sources, there was a consensus in the meeting that the steps taken in this field by the government would be progressive and forward looking.
