Cryptocurrency Bill 2021: Future of Cryptocurrency In India, What Crypto Investors and Traders Should Know.
The future of cryptocurrency in India, and the future of cryptocurrency trading in India, are two different aspects of the ongoing debate around the introduction of the Cryptocurrecny Bill 2021, ‘Cryptocurrency and Regulation of Digital Currency 2021 Bill’ in the winter session of the Indian Parliament.
Cryptocurrencies are neither legal nor illegal in India. So far, they are unregulated. But that doesn’t mean Cryptocurrency exchange and investment platforms are free to do whatever they want in India. They still operate within the broader legal ambit of financial regulations and laws such as money laundering-related laws, etc. hence the need for a comprehensive Cryptocurrency Bill 2021.
Following a parliamentary standing committee meeting, which opined that regulation is the need of the hour rather than a blanket ban on cryptocurrencies in India, there are many speculations on the government plans for the cryptocurrencies.
The Reserve Bank still maintains its stand that cryptocurrencies are a great threat to financial systems and that there has to be a blanket ban on cryptocurrencies in India.
Furthermore, the summary of the new proposed bill on cryptocurrencies, in the list of bills for the winter parliament session, is left unchanged from last year’s proposed bill summary. This has sparked further speculation on the future of cryptocurrencies.
While finance minister, Nirmala Sitaraman, made it clear that there won’t be any bill for legalizing cryptocurrency in India, she also added that a bill -Cryptocurrency Bill 2021-seeking regulation on cryptocurrency trading will be introduced in the parliament, the earliest being the current winter session, pending approval from the cabinet.
Future of the Cryptocurrency in India
Government has no control over cryptocurrencies, it is simply not possible for the government to directly ban the cryptocurrencies in India. As long as someone can access the internet, they can always buy cryptocurrencies online, either directly with Indian currency or using many other conversion methods available with cryptocurrency exchange platforms.
However, the government can ban the use of Indian currency to buy cryptocurrencies and the conversion of cryptocurrencies to Indian currency. One of the reasons why the nascent cryptocurrency industry is welcoming the idea of a regulation bill with open hearts, as opposed to a bill seeking a ban on cryptocurrency trading and investments.
The definition of ‘Private Cryptocurrencies’ in India
The summary of the proposed bill has the same usage of the language as the previous bill seeking the ban on Private Cryptocurrencies in India. According to Subash Garg, who drafted the previous version of the cryptocurrency bill in 2019, this could have been a mistake. Speaking in an interview, Subash Garg, ex-finance secretary, opined that many in the government still don’t understand cryptocurrency, and much discussion on the subject is needed for drafting the bill.
Central banks of some countries are working on digital currencies of their own, does this mean that the Indian government is also working on a cryptocurrency? Is that the reason for the use of the term ‘Private Cryptocurrencies’ as opposed to the government cryptocurrencies? We need to wait to know the finance ministry’s definition of Private Cryptocurrencies.
In any case, a government cryptocurrency for 130 crore Indians won’t be an easy task, much less making the idea inclusive, owing to the digital divide in the country. Remember, millions of Indians still don’t have access to smartphones.
The Future of Cryptocurrency Trading and Investing in India
According to the Global Crypto Adoption Index 2021, India is second among the countries with rapid crypto adoption rates. An estimate of over 20 million Indians are involved in Cryptocurrency trading and investments of over $5.3 billion.
Any meaningful bill on Cryptocurrency regulation has to consider these numbers and many other aspects of Cryptocurrency trade. The objective should be to address key security issues like what are the consequences of cryptocurrencies on national fiscal health and inflation while building a framework for regulated trade and investments for the young workforce of the country, who should be left out in taking advantage of the economic opportunities that cryptocurrencies might provide.
