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India Moves a Step Forward for Regulations in Crypto, but a Lot Remains Unsaid as of Now!

From breaking down the title and description, to the actual contents of the bill, a lot of information is needed, which if not provided timely may seem catastrophic for the Local crypto markets.

The long-awaited bill for legislation on cryptocurrencies is listed for tabling in the upcoming Winter Session of the Parliament of India, to be held from November 29 to December 23.

Contents of India’s Crypto Bill

 

Source: Lok Sabha

The bill is titled “The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021”.

Its purport or description is

“To create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India. The Bill also seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.”

As the description states India’s central bank, the Reserve Bank of India (RB), is going to create its own Central Bank Digital Currency (CBDC).

But, ‘private cryptocurrencies’ will be banned.

Interpretation of Terms

We do not know what is the definition of ‘private cryptocurrencies’ in the bill and what exceptions are going to be made.

Source: Inter-ministerial Committee

The 2019 report of the Inter-ministerial Committee (IMC), of the Department of Economic Affairs, states that “A virtual currency therefore may be a private medium of exchange, but does not in any way reflect a sovereign guarantee of the value or legal tender status.”

“All these cryptocurrencies have been created by non- sovereigns and are in this sense entirely private enterprises.”

The IMC had recommended prohibiting all the cryptocurrencies in the country except any issued by the State. But, as it is mentioned in the purport of the bill, exceptions will be made.

No one knows what is the interpretation of private cryptocurrencies this time. 

Furthermore, how will the exceptions be defined? Will Bitcoin or Ethereum come under the ‘exceptions’?

Only the Government knows about this.

Trends from Recent Past

Just last week during the landmark meet, between the Parliamentary Standing Committee on Finance and crypto industry players, reportedly “There was an understanding that cryptocurrency can’t be stopped but it must be regulated”.

It remains to be seen to what extend crypto cannot be stopped.

But the exchanges were also criticised for the recent advertisement blitz.

RBI Governor Shaktikanta Das recently called into question the amount of money invested in crypto by Indians, by calling the number exaggerated. He had called for serious discussions between the regulators and crypto industry players to arrive at regulatory clarity.

Earlier this year, Union Minister of Finance, Smt. Nirmala Sitharaman had called for a ‘calibrated’ position towards regulation.

It has also been reported that the Government may categorize crypto assets as ‘asset class’ and the Finance Ministry was forming a team to examine and formulate taxes on crypto assets.

The title and the purport of the current Crypto Bill are same as those of the bill listed for the Budget Session.

Sources have revealed that this step is procedural and the title and purport of the Bill may be changed before introduction in the Parliament.

Speculation is Unnecessary

Upon the release of this news, Indian crypto markets tumbled. Rarely, crypto assets are traded at discounted prices in India as compared to international markets.

The Government is standing for the Distributed Ledger Technology also known as a blockchain, according to the bill. Maybe the bill will provide for a basic regulatory framework and guidelines for the industry.

On the same day, November 23, the United States also released a document providing a roadmap towards regulatory clarity. The country’s central bank, the Federal Reserve released its “Joint Statement on Crypto-Asset Policy Sprint Initiative and Next Steps”. It has a roadmap for 2020 that aims to build a profound understanding of ‘crypto-assets’ among various institutions. The aim is to make consumers’ experiences safe and seamless and to provide regulatory clarity for everyone.

A lot of information about the Bill is needed to arrive at a conclusion.

We do not know whether it is a money bill or a non-money bill.

It remains to be seen whether the bill will be discussed or not. Even if it does, it could be referred to some committee. Sometimes it takes years for a bill to make a return to the Parliament after being referred to a committee. There could be several other checkpoints to be passed before it becomes a law.

So, there’s no point in speculating.

India has a plethora of renowned crypto projects. Even foreign companies want to have a base in India. For, example Coinbase one of the premier crypto exchanges has an office in India.

Polygon Network, a popular blockchain network started by Indians, also has a base in India.

Will these companies be allowed to stay in India? No one knows.

News recommendation: Unified Crypto Wallet Can Address Regulatory Concerns : Think Tank

Cover Image: Flickr

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