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The Bill to ban all private cryptocurrencies and facilitate introduction of the Central Bank Digital Currency (CBDC) tops the government’s busy agenda for the Winter Session of Parliament.
The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 along with the Banking Laws (Amendment) Bill, 2021, that paves the way for privatisation of two public sector banks, the PFRDA (Amendment) Bill, 2021 that fulfils the Budget 2019 announcement on separation of the National Pension System Trust from the pension regulator and the Bill to repeal all the three farm laws are among the most significant of the total 26 Bills listed for debate and passage by the government in the upcoming session.
Official digital currency
The most critical is the Cryptocurrency Bill that proposes “to create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India. The Bill also seeks to prohibit all private cryptocurrencies in India”. However, it allows for “certain exceptions to promote the underlying technology of cryptocurrency and its uses”.
This is the second attempt to bring a Bill in the House to ban all private cryptocurrencies. The government had, during the Budget session, listed a similar Bill with an intent to ban all private cryptocurrencies and facilitate the CBDC. However, it did not bring the Bill in the Lok Sabha. This Bill was not listed in the Monsoon Session that followed. However, it has been included for the Winter Session.
This comes after Prime Minister Narendra Modi’s caution on cryptocurrency falling into “the wrong hands” as it can “spoil the youth”. Earlier this month, Modi had chaired a high-level meeting of all stakeholders including the RBI and the Finance Ministry, all of which expressed concern on the possible misuse of cryptos and advertisement for them.
The Bill encompasses the views of RBI Governor Shaktikanta Das who had, in an interview to BusinessLine in August, said: “We have major concerns around private cryptocurrency from the point of view of financial stability. Private cryptocurrency is different from distributed ledger technology (DLT) or blockchain. They should not be mixed up.” Further he said that DLT or blockchain technology is nothing new. It's an open-source technology. It is being used even today by several corporates for their business operations. The technology part can continue to be used and exploited without a private cryptocurrency.
A joint advertisement by Indian crypto exchanges and industry bodies said that investments by Indians in Indian crypto assets have crossed ₹6-lakh crore. There are reports, quoting research firm CREBACO, suggesting that the number of crypto investors has crossed 10 crore.
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