What is Cryptocurrency Bill & What Happens to Those Holding Bitcoins in India?

Cryptocurrency bill in India

Minister of state for finance Anurag Singh Thakur had said on the floor of Parliament that a cryptocurrency bill is being finalised and would be sent to Union Cabinet soon.

Finance Minister Nirmala Sitharaman, while responding to a question in the Rajya Sabha on the government’s plan to issue guidelines on cryptocurrency trading, said a high-level committee, which was formed to study issues related to virtual currencies, recommended that all private cryptocurrencies, except any virtual currencies issued by state, will be prohibited in the country.

The Reserve Bank of India (RBI) had banned banks from processing transactions relating to cryptocurrency in 2018. Last year, in March, the Supreme Court lifted the ban, stating that it was violative of the freedom of business and profession under Article 19(1)(g) of the Constitution. Since then, cryptocurrency has been operating in a legal vacuum in India.

Here is a rundown of the possibilities lying ahead for crypto in India.

WHAT IS A CRYPTOCURRENCY BILL?

The Indian government does not consider cryptocurrencies legal tender or coins. So, the government wants to eliminate the use of cryptocurrencies and doesn’t want such currencies to become a part of the payment system. It has thus listed a bill in Parliament, seeking to bar all private cryptocurrencies in India, and also lay the groundwork for an official digital currency. The detailed provisions of the bill have not yet been released to the public.

A few days ago, even RBI had stated that it was working on a digital version of the rupee and results were expected soon. A summary of the bill stated that it sought to “create a facilitative framework for the creation of the digital currency to be issued by the Reserve Bank of India”. Such official currencies are being contemplated by several central banks globally, such as Canada, USA, Singapore and China.

WHAT DOES IT MEAN FOR BITCOIN?

Since the detailed provisions of the bill are not yet known, there isn’t much clarity on whether those holding Bitcoins or other cryptocurrencies should sell them or not. However, the bill does mention that certain exceptions may be made to preserve the underlying technology of cryptocurrencies, which is blockchain.

Blockchain is used to maintain records in such a way that they cannot be tampered with easily. Apart from cryptocurrencies, technology is used to preserve records such as educational certificates, land documents etc.

Globally, governments are positive about blockchain as a technology but have negative views about cryptocurrencies. In the bill listed in the Parliament, the Indian government, too, seems to have taken a similar stand.

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