No proposal to recognise Bitcoin as a currency: FM Nirmala Sitharaman

Union Finance Minister Nirmala Sitharaman informed the Lok Sabha on Monday that there is no proposal before the government to recognise Bitcoin as a currency. In a written reply in the Lok Sabha, Sitharaman said the government does not collect data on Bitcoin transactions.

To a question on whether the government has any proposal to recognise Bitcoin as a currency, Sitharaman said, “No, sir”. Bitcoin, a digital currency introduced in 2008 by programmers as a cryptocurrency, allows people to buy goods and services and exchange money without involving banks, credit card issuers or other third parties.

The government plans to introduce a Bill in this regard — the Cryptocurrency and Regulation of Official Digital Currency Bill 2021 — in the ongoing session. The Bill seeks to ban all private cryptocurrencies, but might allow the underlying technologies.

In a separate reply to a written question, Union Minister of State for Finance Pankaj Chaudhary said the government received a proposal from the Reserve Bank of India (RBI) in October seeking an amendment to the RBI Act, 1934, to enhance the scope of the definition of “bank note” to include currency in digital form.

The RBI has been examining use cases and working out a phased implementation strategy for introduction of a Central Bank Digital Currency (CBDC) with little or no disruption, he said in reply to the question asked by Adoor Prakash.

Chaudhary said the introduction of a CBDC has the potential to provide significant benefits, such as reduced dependency on cash, higher seigniorage due to lower transaction costs and 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,” he said.

Inflation

Sitharaman told the Lok Sabha that the Centre is monitoring the prices of major essential commodities and corrective actions are being taken from time to time.

“The uptrend in inflation has been largely led by exogenous factors — increased international prices of crude oil and edible oils, which have an impact on domestic inflation due to India’s import dependence on these items,” she said in a written reply.

The rise of wholesale price index (WPI)-based inflation is also mostly driven by “fuel and power” and manufactured products inflation, once again driven by increased global prices of crude oil and increase in international commodity/input prices, she said.

Several supply-side measures have been taken by the government to curb the inflationary pressures, she said.