Pankaj Chaudhary, the Minister of State for Finance, said during the Winter Session of Parliament on Monday that the government does not expect the cryptocurrency sector to boom.
Finance Ministry officials also during the session stated that the government does not collect any crypto data and the central bank digital currency (CBDC) would be free from volatility like private cryptocurrencies. As cryptocurrency is illegal in India, the government does not collect any data related to it.
Why India does not want to engage with cryptocurrencies?
The Indian government is poised to ban most of the private cryptocurrencies under a long-awaited bill. The ban looks certain for all private cryptocurrencies but for certain exceptions to allow the promotion of the underlying technology.
According to the RBI, cryptocurrencies pose serious threats to the macroeconomic and financial stability of the country, and the number of investors trading on them as well as their market value are also questionable. Illegal activities, including tax evasion, can be facilitated through this system. Investors can shield their income from tax authorities, resulting in a tax gap for the government.
A bill to regulate cryptocurrencies will be introduced by the Indian government in the ongoing parliament session, following rapid developments in the cryptocurrency space. Additionally, in response to a question regarding the availability of data regarding cryptocurrency exchanges working in India for both local developers and international developers, the government stated that it does not collect any data on the cryptocurrency sector.
During the current session of the Lok Sabha, a bill on cryptocurrency and regulation of official digital currency is expected to be introduced. Nirmala Sitharaman, finance minister, said earlier that global action is needed to regulate cryptocurrencies and other developing technologies.
During the Hindustan Times Leadership Summit 2021, the finance minister said the government will introduce a “well consulted” cryptocurrency bill.
A bill titled ‘Cryptocurrency and Regulation of Official Digital Currency Bill, 2021’ seeks to create a facilitative framework for the creation of the RBI’s official digital currency.
At present, there is no regulation or ban on the use of cryptocurrencies in the country. Some RBI officials have repeatedly reiterated their strong opposition to cryptocurrencies, saying that they pose serious threats to the macroeconomic and financial stability of the country. The RBI has also questioned the number of investors trading on them as well as their market value.
Additionally, RBI Governor Shaktikanta Das has reaffirmed his opposition to cryptocurrencies, saying cryptocurrencies are a threat to the financial system as they are unregulated by central banks.
