The government has clarified that it is has no proposal to recognise cryptocoins in a written reply to Lok Sabh on Monday (November 29). The written reply by Finance Minister Nirmala Sitharaman said it does not collect data on Bitcoin transactions.
The Crypto Bill is one of the many items on the list of bills to be introduced in Parliament during the Winter Session.
The government plans to introduce the Cryptocurrency and Regulation of Official Digital Currency Bill 2021 in the ongoing Winter Session of Parliament. The Bill seeks to ban all but a few private cryptocurrencies to promote underlying technologies while allowing an official digital currency by RBI.
No proposal to recognise Bitcoin as currency: FM
On being asked whether the government has any proposal to recognise Bitcoin as a currency in the country, the Finance Minister said ''No, sir''.
The Ministry said, "Cryptocurrencies are unregulated in India. RBI has vide its circular dated May 31st, 2021, advised its regulated entities to continue to carry out customer due diligence processes in line with regulations governing standards for Know Your Customer (KYC), Anti-Money Laundering (AML), Combating of Financing of Terrorism (CFT) and obligations of regulated entities under Prevention of Money Laundering Act, (PMLA), 2002 in addition to ensuring compliance with relevant provisions under Foreign Exchange Management Act (FEMA) for overseas remittances."
The government will look at a regulatory mechanism like it is done for currency by Reserve Bank of India (RBI), according to news reports. Cryptocurrency could be treated as a commodity and will be taxed. There will be a regulatory mechanism on cryptocurrency like there is RBI for currencies.
The Government has received a proposal from RBI in October, 2021 for amendment to the Reserve Bank of India Act, 1934 to enhance the scope of the definition of ‘bank note’ to include currency in digital form.
Central Bank Digital Currency
RBI has been examining use cases and working out a phased implementation strategy for the introduction of Central Bank Digital Currency (CBDC) with little or no disruption, said the Ministry of Finance in a written reply in Lok Sabha.
In a written reply to a query on CBDC, the Finance Ministry said: "Central Bank Digital Currency (CBDC) is introduced by a Central Bank. Government has received a proposal from Reserve Bank of India (RBI) in October, 2021 for amendment to the Reserve Bank of India Act, 1934 to enhance the scope of the definition of ‘bank note’ to include currency in digital form.RBI has been examining use cases and working out a phased implementation strategy for introduction of CBDC with little or no disruption.
"Introduction of CBDC has the potential to provide significant benefits, such as reduced dependency on cash, higher seigniorage due to lower transaction costs, reduced settlement risk. Introduction of CBDC would also possibly lead to a more robust, efficient, trusted, regulated and legal tender-based payments option. There are also associated risks which need to be carefully evaluated against the potential benefits."
Digital currency
Bitcoin is a digital currency that allows people to buy goods and services and exchange money without involving banks, credit card issuers or other third parties.
It was introduced in 2008 by an unidentified group of programmers as a cryptocurrency as well as an electronic payment system. It is reportedly the first decentralised digital currency where peer-to-peer transactions take place without any intermediary.
