Cryptocurrency Bill Suggesting a Possible Ban to Be Introduced Soon

An inter-ministerial committee (IMC), which was constituted to study the issues and propose specific actions related to cryptocurrencies, has recommended in its report that except any virtual currencies issued by the government, all private cryptocurrencies will be prohibited in the country, said Finance Minister Nirmala Sitharaman responding to a question in the Rajya Sabha

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In what could be the end of the road for bitcoin and other cryptocurrencies in India, the government is gearing up to introduce a bill in the parliament that will possibly put a blanket ban on the digital tokens, Anurag Thakur, Minister of State for Finance, suggested in the parliament on Tuesday. 

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An inter-ministerial committee (IMC), which was constituted to study the issues and propose specific actions related to cryptocurrencies, has recommended in its report that except any virtual currencies issued by the government, all private cryptocurrencies will be prohibited in the country, said Finance Minister Nirmala Sitharaman responding to a question in the Rajya Sabha. 

As per Thakur, the government will bring a bill on the subject of cryptocurrencies as they are neither currencies nor assets, placing them outside the regulatory ambit of the Reserve Bank of India or the Securities and Exchange Board of India (Sebi).

"Regulatory bodies like RBI and Sebi etc also don’t have a legal framework to directly regulate cryptocurrencies as they are neither currencies nor assets or securities or commodities issued by an identifiable user. The existing laws are inadequate to deal with the subject. The government had formed an inter-ministerial committee and the committee has given a report,” he said.

“Post that there was a meeting of the empowered technology group which happened earlier. The committee of secretaries which was chaired by the cabinet secretary has also given their report. The bill is being finalised and will be sent to the cabinet soon. So we will be bringing the bill soon.

At the same time, the government is also keen on introducing its own digital sovereign currency and the bill will create a facilitative framework for creation of the official digital currency to be issued by RBI. "It (the bill) allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses,” a circular issued on 29 January stated.

In 2018, RBI had directed all banks and non-banking financial companies (NBFCs) under its ambit to not deal in virtual currencies in any capacity. This included no transfer or receipt of money in accounts relating to purchase or sale of cryptocurrencies, opening accounts of exchanges dealing with them and even maintaining existing accounts. Last year in March, the Supreme Court quashed RBI’s directive terming it “not a reasonable restriction and that it is also extremely disproportionate.”

Shipra Singh

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Entrepreneur Staff

Now a freelance journalist, ealier steered the Wealth section on the Entrepreneur website, covering everything finance. Previously a personal finance reporter at The Economic Times and Outlook Money.