The Lok Sabha bulletin, released on Friday, said one of the purposes of the bill is to “prohibit all private cryptocurrencies in India” while providing certain exceptions to promote the underlying technology.
In 2018, Arun Jaitley, then finance minister, had stated the government’s resolve to discontinue the use of bitcoin and other virtual currencies. And, RBI had banned cryptocurrency transactions. But recently, the Supreme Court permitted people to buy and sell virtual currency. Many see this as creating a regulatory vacuum.
With cryptocurrency seeing a record rise in recent months, the government is seeking to ensure that Indian investors are not exposed to risks.
Besides, there are fears that cryptocurrency is being used for money laundering in the absence of any KYC norms. In fact, some of the exchanges, which operate, had recently launched steps related to KYC.
The bill is seen to be a continuation of the recommendations of a committee headed by then economic affairs secretary S C Garg with Sebi and RBI officials as its members. The panel had endorsed a ban on private cryptocurrencies through legislation but suggested that blockchain and distributed ledger technology be used in financial services for better loan tracking, insurance claims management, and fraud detection.
The proposed legislation banning cryptocurrency has already got the industry worried. “We urge the government to take the opinion of all the stakeholders before taking a decision, which may affect the livelihood of the entire workforce employed in digital asset industry in India. We will engage with our peers and other stakeholders to work towards protecting the interest of the industry,” said Shivam Thakral, CEO of BuyUcoin, which claimed to be the country’s second-longest-running cryptocurrency exchange.
Zebpay, another exchange that claims three million traders globally, said cryptocurrency needed to be treated like an asset class, like gold, while suggesting that the details of the bill needed to be looked at carefully.
“Its (the bill’s) success will depend on the details, particularly the definition of what the bill calls ‘private cryptocurrencies’. This is not a common term. Bitcoin is not privately owned by anyone. It is a public good, like the internet. Bitcoin and most crypto assets are more like gold and not an alternative to government-issued legal tender. Crypto assets and digital government currency can coexist and together, they can bring tremendous benefits to the Indian economy,” Zebpay CEO Rahul Pagidipati said in a statement.
