The Lok Sabha newsletter, published on Friday, said that one of the purposes of the bill is to “ban all private cryptocurrencies in India” while providing certain exceptions to promote the underlying technology.
In 2018, Arun Jaitley, then finance minister, had declared the government’s determination to discontinue the use of bitcoin and other virtual currencies. And, the RBI had banned cryptocurrency transactions. But recently, the Supreme Court it allowed people to buy and sell virtual currency. Many see this as creating a regulatory vacuum.
With the cryptocurrency experiencing a record surge in recent months, the government is looking to ensure that Indian investors are not exposed to risk.
Furthermore, there is a fear that the cryptocurrency is being used for money laundering in the absence of KYC regulations. In fact, some of the exchanges, which do operate, had recently launched KYC-related steps.
The bill is seen as a continuation of the recommendations of a committee headed by then-secretary for economic affairs SC Garg with Sebi and RBI officials as members. The panel had endorsed a ban on private cryptocurrencies through legislation, but suggested that blockchain technology and distributed ledger be used in financial services for better loan tracking, insurance claim management, and fraud detection.
Proposed legislation banning cryptocurrencies has already worried the industry. “We urge the government to take the opinion of all interested before making a decision, which may affect the livelihood of the entire workforce employed in the digital asset industry in India. We will engage with our peers and other stakeholders to work towards protecting the interests of the industry, ”said Shivam Thakral, CEO of BuyUcoin, which claimed to be the second oldest cryptocurrency exchange in the country.
Zebpay, another exchange that claims to have three million merchants worldwide, said that the cryptocurrency should be treated as an asset class, like gold, while also suggesting that the details of the invoice should be examined carefully.
“Its success (of the bill) will depend on the details, particularly the definition of what the bill calls ‘private cryptocurrencies.’ This is not a common term. Bitcoin is not the private property of anyone. It is a public good, like the Internet. Bitcoin and most crypto assets are more like gold and are not an alternative to legal tender issued by the government. Crypto assets and digital government currency can coexist and together can bring huge benefits to the Indian economy, ”Zebpay CEO Rahul Pagidipati said in a statement.
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