The Minister of State for Finance (MoS Finance) Pankaj Chaudhary on August 2 informed Lok Sabha that the government would take a decision on the recommendations of the Inter-Ministerial Committee (IMC) on cryptocurrencies and the legislative proposal, if any, would be introduced in the Parliament following the due process. The minister was answering a question from Dr. Shashi Tharoor, Lok Sabha MP from Kerala.
As to the background, the government had constituted the IMC on November 2, 2017, under the chairmanship of the economic affairs secretary, with the secretary of the Ministry of Electronics and Information Technology, Sebi chairman, and an RBI deputy governor. The mandate of the IMC was to study various issues pertaining to Virtual Currencies and to propose specific actions that may be taken.
The IMC in a report dated 28 February 2019, had recommended the adoption of distributed ledger technology, and a law banning the cryptocurrencies in India and criminalising carrying on of any activities connected with cryptocurrencies in India.
The minister on August 2 response said, “The high-level panel recommended in its report that all private cryptocurrencies, except any cryptocurrency issued by the state, be prohibited in India.”
The government quoted from the 2018-2019 Budget, “It was announced in the Budget Speech for 2018-19 that the government does not consider crypto-currencies legal tender or coin and will take all measures to eliminate the use of these crypto-assets in financing illegitimate activities or as part of the payment system. The government will explore the use of blockchain technology proactively for ushering in the digital economy.”
The same response in Lok Sabha
Interestingly, the government had given the same response in March 2021 responding in writing to Ms. Sumalatha Ambareesh, an MP from Karnataka. Much had changed since then, with the reports indicating that the government is now favouring regulation than an outright ban.
Meanwhile, RBI is awaiting legal clarity to launch central bank digital currency (CBDC). The CBDC may require consequential amendments to other Acts like The Coinage Act, 2011, FEMA, 1999, Information Technology Act, 2000 etc