New Bill on cryptocurrency to be introduced after Cabinet approval: Sitharaman in Rajya Sabha

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Finance Minister Nirmala Sitharaman on Tuesday said the government is working out a new Bill on cryptocurrency which will be placed in the ongoing session of Parliament after approval of the Union Cabinet.

The ongoing winter session is scheduled to end on December 23.

Replying to a series of questions in the Rajya Sabha, she said the new Bill takes into account the rapidly changing dimensions in virtual currency space, and incorporate features of the earlier Bill that could not be taken up.

The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, has been included in the Lok Sabha Bulletin-Part II for the introduction in the ongoing winter session.

The Bill seeks to create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India (RBI), the Bulletin said.

It 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.

“Yes, last time (monsoon session) there was a Bill but subsequently because there were other dimensions…That Bill has been reworked. And in a way the bill which is coming now is a new Bill. But, never mind, the work done on that Bill have all been taken on board here,” the minister said.

Sitharaman the government had “genuine intent” to bring the Bill even during the last session.

“Now, we are coming up with a new Bill. So, it’s not as if, the last time we just put it there, we did not want to come up with one. So, leading to a suspicion that this time also we are putting a Bill, we may not come up with one. No, let’s be clear on that the earlier attempt was definitely to come up with a Bill which the house can consider,” she added.

The government, she said, started working on a new Bill as a lot of things had to come into play.

“This Bill, once the Cabinet clears it, will come here into the House,” the finance minister said, and added the proposed legislation is likely to be introduced soon.

On asked if the government proposes to ban misleading advertisements in media, she said the guidelines of Advertising Standards Council of India are being studied and their regulations are also being looked into “so that we can take, if necessary, some kind of a position or a decision to see how we are going to handle it”.

The minister also said cryptocurrencies are unregulated in India and the government does not collect data on transactions in cryptocurrency.

Sitharaman also said the government, RBI and Sebi have been cautioning people about the cryptocurrencies that could be a “high risk” area and “more can be done” to create awareness.

A study was conducted by the government through a research firm on ‘Virtual Currencies: An Analysis of the Legal Framework and Recommendations for Regulation’ in July 2017. Thereafter, the government constituted an interministerial committee (IMC) in November 2017 under the chairmanship of the secretary (economic affairs) to study the issues related to virtual currencies and propose specific action to be taken in this matter.

The committee, inter-alia, recommended that all private cryptocurrencies be prohibited in India. The panel also recommended that it would be advisable to have an open mind regarding the introduction of an official digital currency in India.

Meanwhile, to a question if craze of cryptocurrencies has increased among Indian investors and unlawful activities have increased through cryptocurrencies in the country, Minister of State for Finance Pankaj Chaudhary said “Yes”.

“RBI has been cautioning users, holders and traders of virtual currencies (VCs) vide public notices on December 24, 2013, February 1, 2017, and December 5, 2017, that dealing in VCs is associated with potential economic, financial, operational, legal, customer protection and security related risks,” he said.

The RBI in a circular dated May 31, 2021, has also advised its regulated entities to continue to carry out customer due diligence processes for transactions in VCs, in line with regulations governing standards for Know Your Customer (KYC), anti-money laundering, Combating of Financing of Terrorism, obligations under the Prevention of Money Laundering Act, 2002, he added.