'No blanket ban on cryptocurrencies; laws to be progressive': Government sources

The government may not be thinking of any blanket ban on cryptocurrencies but could bring legislation to regulate the crypto markets, top sources in the government have told News18.

A government source referred to the meeting chaired by Prime Minister Narendra Modi on the crypto issue on November 13 in which he said a consensus was arrived at that the steps taken in this field by the Government will be “progressive & forward-looking”. At the said meeting, it was also discussed that “unregulated” crypto markets cannot be let to become avenues for money laundering and terror financing. “The sense hence is that the approach to cryptocurrencies is more towards regulation than a total ban,” the government source said.

Much speculation has arisen over the fate of the cryptocurrency market after the Lok Sabha Secretariat bulletin on Tuesday mentioned ‘The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021’ as one of the bills proposed by the government for inclusion in the legislative business in the upcoming parliament session. The bill’s brief text in the bulletin mentioned ‘to create a facilitative framework for the creation of official digital currency to be issued by RBI; the bill also seeks to prohibit private cryptocurrencies in India, however, it allows, for certain exceptions to promote the underlying technology of cryptocurrency and its uses.”

Incidentally, this text of the bill was the same as was mentioned in a Lok Sabha Secretariat bulletin in January as well before the budget session this year. The bill was never brought before the session then and there are doubts over whether the present document is a cut-and-paste from the earlier one.

“One would know the content of the bill only when it is tabled. Right now, it is unclear even if the bill has been prepared,” a government source said. The draft bill on the subject was first brought in the public domain in 2019, which proposed punishing mining, holding, selling, issuing, transfer or use of cryptocurrency with a 10-year jail term.

However, the scenario has changed much since, sources said. A detailed consultative process has happened since with RBI, Finance Ministry and Home Ministry doing an elaborate exercise on it and consulting experts from across the world and looking at global examples and best practices.

At the PM’s meeting on November 13, it was decided that government will continue to pro-actively engage with the experts and other stakeholders and since the issue cuts across individual countries borders, it was felt that it will also require global partnerships and collective strategies. The major issue for the government regarding cryptocurrencies remains youth being misled by over-promising and non-transparent advertising, which a legislation may attend to.