Govt may not introduce cryptocurrency bill in ongoing Parliament session

Amid calls for more debate, Parliament's Winter Session, ending on December 23, is unlikely to take up the widely watched legislation.

A Union Cabinet meeting on Wednesday is unlikely to discuss a Bill regulating cryptocurrencies, Business Standard learns, meaning that Parliament’s Winter Session ending on December 23 is unlikely to take up the legislation.

The government had listed the Cryptocurrency and Regulation of Official Digital Currency Bill 2021 for tabling and passage in session. While the written listing had said that the Bill would prohibit all private cryptocurrencies in India, it was later clarified that the descriptor had been carried over from the listing of the previous Budget Session of Parliament.

The Bill had not been introduced then and was not listed for the Monsoon Session.

Finance Secretary TV Somanathan and other officials have made two things clear: That cryptocurrencies will not be allowed as legal tender, and that they may be allowed as regulated tradable financial assets.

Finance Minister Nirmala Sitharaman has told Lok Sabha the Bill was in final stages of consultation for the consideration of cabinet. She had earlier said that the government would bring a ‘well consulted’ legislation.

Regulators wary

There have been reports that Securities and Exchange Board of India could be regulating cryptocurrencies as assets. However, sources have told Business Standard that the Securities and Exchange Board of India (Sebi) and the Reserve Bank of India (RBI) are both rather reluctant and would rather have nothing to do it.

By its very definition, a safe financial asset is one that gives steady returns over a period of time. But given the volatility of the cryptocurrency market, steady returns are not guaranteed, officials say.

RBI Governor Shaktikanta Das has sounded the alarm on the bourgeoning sector and said that cryptocurrencies are a very serious concern from a macro economic and financial stability point of view. He also said that the number of Indians trading in cryptocurrency looks highly exaggerated.

By conservative estimates of the cryptocurrency exchanges, some 2 crore Indians hold investment in the sector worth around Rs 15,000-20,000 crore. Many in the government believe that given the rapid rise of the sector, it needs regulations, and fast. 

On November 13, Prime Minister Modi chaired a meeting on cryptocurrency. After that, sources said that advertisements by cryptocurrency companies, exchanges and other such entities which over-promise and are not transparent need to stop.