The government doesn’t collect information on cryptocurrency or Bitcoin transactions in the country and has no plans to recognise Bitcoin as a currency, the Finance Ministry told Parliament on Monday.
Responding to separate queries from Lok Sabha MPs on the booming trade in cryptocurrency in the country and whether the government has legally permitted their exchanges to do business, the Ministry said ‘cryptocurrencies are unregulated in India’ and it ‘does not collect information’ on their trading.
Reserve Bank of India (RBI) Governor Shaktikanta Das has been raising serious concerns about cryptocurrency in the context of macroeconomic and financial stability and has called for more ‘well-informed’ public discussions to understand the ‘far deeper issues’ involved.
The government has plans to introduce a Bill to regulate cryptocurrency, possibly ban all private cryptocurrencies and facilitate the creation of the official digital currency, in the ongoing winter session of Parliament.
Last month, the RBI, which is eyeing a pilot project for a central bank digital currency (CBDC), urged the government to amend the RBI Act of 1934, Minister of State for Finance Pankaj Chaudhary said in response to a query. The law will need to be changed to enhance the scope of the definition of a ‘bank note’ so as to include digital currency.
“RBI has been examining use cases and working out a phased implementation strategy for introduction of CBDC with little or no disruption,” the Minister said, adding that an official digital currency can potentially 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 noted.
As per the available purport of The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, the government may ban all private cryptocurrencies in India, while allowing for ‘certain exceptions to promote the underlying technology of cryptocurrency and its uses’.
Prime Minister Narendra Modi recently held a meeting with top officials from the central bank and the Ministries of Home Affairs and Finance on cryptocurrencies and expressed concerns about attempts to mislead the youth through over-promising and non-transparent advertising.
Bitcoin scam
On the Bitcoin hacking scam in Karnataka, the Finance Ministry said a case has been registered by the Bangalore zonal unit of the Enforcement Directorate, It added that any further disclosure of information in the matter is ‘not in larger public interest’ and put the onus on the State for probing the criminal aspects of the case.
“Information in public domain suggests that a case of cybercrime involving Bitcoin has been under examination by the Karnataka police. ‘Police’ and ‘Public Order are State subjects as per the Seventh Schedule of the Constitution of India,” Mr. Chaudhary said in reply to an unstarred question on the case.
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