Govt to bring forward a Crypto Bill soon: Clear definitions, no grey areas

Operationalising the ban is being fleshed out by Centre

The government is fine-tuning the operationalisation part for banning private cryptocurrencies for the new legislation that will be sent to Cabinet for approval soon.

The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, or Crypto Bill, will take care of which cryptocurrencies the government is seeking a ban on, with clear definitions to plug any grey areas that could possibly arise due to the evolution of technology, said a senior government official.

“Clear definitions will seek to cover private cryptocurrencies. Otherwise the legislation will be open-ended, leading to several interpretations of the evolving technology,” added the official. 

Operationalising the ban is being fleshed out: it will entail which cryptocurrencies will be banned and how.

The Department of Economic Affairs (DEA) is holding consultations, and inputs will have to be incorporated into the Bill.

The bitcoin has seen its prices surge. The recent trigger being Tesla, Inc.’s announcement of having bought $1.5 billion in bitcoin. Its endorsement of the cryptocurrency — allowing customers to pay for its electric vehicles with the bitcoin soon — is expected to sustain the rally. This is seen as a move that could expand how the most popular cryptocurrency is used for real-world transactions.

The DEA feels the urgent need to bring in the legislation, and is working on it, said the official quoted earlier.

On Tuesday, Minister of State for Finance Anurag Thakur said in Parliament that there are different definitions of cryptocurrencies or virtual currencies the world over. The government and the Reserve Bank of India (RBI) have taken initiatives and banned private cryptocurrencies.

The inter-ministerial committee (IMC), headed by former finance secretary Subhash Chandra Garg, had first suggested a draft Bill to ban cryptocurrencies, which defined the virtual currency as a “cryptocurrency, by whatever name called, means any information or code or number or token not being part of any official digital currency, generated through cryptographic means or otherwise, providing a digital representation of value which is exchanged with or without consideration, with the promise or representation of having inherent value in any business activity which may involve risk of loss or an expectation of profits or income, or functions as a store of value or a unit of account and includes its use in any financial transaction or investment, but not limited to, investment schemes”.

“The government will take a decision on the recommendations of the IMC and the legislative proposal, if any, will be introduced in Parliament following due process,” Finance Minister Nirmala Sitharaman said in a written response to a question in the Rajya Sabha.

Existing laws are inadequate to deal with the subject, said Thakur. The government formed the IMC, and it has furnished its report, he said, adding there was also a meeting of an empowered technology group, which took place earlier. 

Thakur said that the committee of secretaries, chaired by the Cabinet secretary, has also given its report, and the Bill is being finalized and will be sent to Cabinet soon.

The Supreme Court, in March 2020, had struck down the RBI’s restrictions on banks to stop providing services to crypto trading platforms. This led to uncertainty about the status of virtual currencies in India. The new legislation will clear the government’s stand on cryptocurrencies.

There have been excessive consultations on the draft legislation, as the government wanted to avoid any ambiguity, said the official.

In the current session of Parliament, the government has listed the introduction of the Crypto Bill that seeks to create a ‘facilitative framework’ for creation of an official digital currency that will be issued by the RBI. The Bill will prohibit all private cryptocurrencies in India, but will allow for certain exceptions to promote the underlying technology of crytptocurrency, and its uses.

The RBI has also said it is examining the need to introduce a central bank digital currency in the country.