Finance minister Nirmala Sitharaman said on Monday that the central government has no plan to accept Bitcoin as legal tender in the country. Answering to whether the government is aware that Bitcoin transaction is silently blooming in India in the recent years, Sitharaman said that the Centre does not collect any data on Bitcoin transaction in India.
India has the highest number of cryptocurrency holders in the world at 10.07 crore, according to broker discovery and comparison platform BrokerChooser. With 2.74 crore crypto-owners US came at the second position followed by Russia (1.74 crore) and Nigeria (1.30 crore).
The central government is all set to introduce the ‘Cryptocurrency and Regulation of Official Digital Currency Bill, 2021’ during the Winter session of the Parliament. The bill sought to ban all private cryptocurrency in the country, barring few exceptions.
“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,” the bulletin in the Lok Sabha website mentioned. It also sought “to create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India.”
In 2017, the central government has set up a high-level inter-ministerial committee under Subhash Garg, secretary, DEA to the issues related to virtual currencies. The committee submitted a detailed report in July 2019, proposing a blanket ban for cryptocurrencies in India. The committee recommended that all cryptocurrencies have been created by non-sovereigns, and are in this sense entirely private enterprises. There is no underlying intrinsic value of these private cryptocurrencies as they lack all the attributes of a currency. The committee suggested “all private cryptocurrencies, except any cryptocurrency issued by the State, be banned in India”.
But a lot has been changed since then. Earlier this month, Prime Minister Narendra Modi had chaired a high-level meeting on cryptocurrencies with officials from the RBI, finance ministry, and the Securities and Exchange Board of India (Sebi). India’s next step to regulate cryptocurrencies will “be proactive, progressive and forward-looking” as (crypto) is an evolving technology, according to reports. The parliamentary standing committee on finance has met with crypto industry representatives, stakeholders and experts.
On cryptocurrency, Prime Minister Modi has recently said at the Sydney Dialogue, “It is important that all democratic nations work on this (cryptocurrency) and ensure that it does not end up in the wrong hands, which can spoil our youth.”
“Total number of crypto investors in India stands few crores with total investment of Rs 6 lakh crore according to a group of 13-members including Internet and Mobile Association of India, Blockchain and Crypto Assets Council’s (BACC), crypto exchanges and others that are part of crypto investment ecosystem in India. CoinSwitchKuber and WazirX are two popular crypto exchanges in India with 1.1 crore and 83 lakhs users respectively, surpassing even India’s largest stockbroker Zerodha which has 70 lakh clients. Crypto investment is not only limited to metros but is garnering lot of interest from young population in tier II/tier III cities. Currently there is lot of uncertainty but government is making efforts to soon put out proper regulation with regards to crypto investment as it is quickly getting widespread across India,” said Hemang Jani, Head – equity strategy, broking and distribution, Motilal Oswal Financial Services.
The proposal for a central bank digital currency (CBDC) backed by the Reserve Bank of India may be included in the upcoming bill to regulate cryptocurrency, according to reports.
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