IBEF: November 25, 2021
India is contemplating a proposal to take up cryptocurrencies as a financial asset while protecting small investors.
The arguments come as authorities race to finalise a bill Prime Minister Mr. Narendra Modi’s government intends to introduce to parliament in the session beginning November 29, 2021. The bill may stipulate a minimum amount for investments in digital currencies, while prohibiting their use as legal tender, according to people who were aware of the development.
Policy makers left themselves some wiggle room when they published a description of the bill on parliament’s website, by stating the bill intends to ban all private cryptocurrencies except “certain exceptions to promote the underlying technology of cryptocurrency and its uses.”
The ambiguity triggered a sell-off on Wednesday in cryptocurrencies including Shiba Inu and Dogecoin, which were at one point down >20% in trading on the WazirX platform, one of India’s leading cryptocurrency exchanges. They were far less impacted on trading platforms such as Binance or Kraken.
The Reserve Bank of India intends a complete ban on digital currencies as the central bank feels it could influence the nation’s macroeconomic and financial stability. While the government is contemplating taxing gains from cryptocurrency in the next budget, Governor Mr. Shaktikanta Das last week stated the country requires much deeper debates on the issue.
The Prime Minister’s Office is actively considering at the issue, and once the contents of the bill are settled it would be taken to the Cabinet for its approval, the people stated.
Earlier this month, PM Mr. Modi held a meeting on cryptocurrencies, after which officials said India wont let unregulated crypto markets become avenues for money laundering and terror financing. Later, in a speech last week, he appealed democratic nations to join forces in regulating private virtual currencies failing which they could land up in the “wrong hands”.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.