In what is a sign India could be softening their position, 2021 legislation currently before Indian Parliament is anticipated to allow some form of cryptocurrency investment to be legalized.
Indian Government Answers Questions on Bitcoin Transactions, Karnataka Scam, Legality of Crypto Trading
The Indian government has answered three sets of questions in parliament regarding bitcoin transactions, the high-profile bitcoin scam in Karnataka, and the legality of cryptocurrency trading and crypto exchanges in India. Meanwhile, the winter session of parliament has begun and a crypto bill is expected to be taken up during this session.
Indian Government Answers Questions About Bitcoin Transactions
On Monday, the Indian Ministry of Finance answered three sets of questions on bitcoin and cryptocurrency trading in Lok Sabha, the lower house of India’s parliament.
The first set of questions (Starred Question No. 12), titled “Bitcoin Transactions,” ask Finance Minister Nirmala Sitharaman “whether the government is aware that bitcoin transaction is silently blooming in India in the recent years.” The finance minister replied:
The government does not collect data on bitcoin transactions.
Finance Minister Sitharaman was further asked “whether the government has any proposal to recognize bitcoin as a currency in the country.” She simply replied: “No, sir.”
Questions About the Bitcoin Scam in Karnataka
The second set of questions (Unstarred Question No. 196) are about the high-profile “Bitcoin Scam in Karnataka,” which recently received heavy media coverage. The case was even brought up by Karnataka Chief Minister Basavaraj Bommai during his meeting with Prime Minister Narendra Modi.
The finance minister was asked about the scam and details of the investigation and action being taken.
The Minister of State in the Ministry of Finance, Shri Pankaj Chaudhary, replied: “Information in public domain suggests that a case of cybercrime involving bitcoin has been under examination by the Karnataka police … However, a case has also been registered by Bangalore Zonal Unit of the Directorate of Enforcement. Further disclosure of information in the matter is not in larger public interest.”
Questions About the Legality of Cryptocurrency Trading and Crypto Exchanges in India
The third set of questions (Unstarred Question No. 173), titled “Cryptocurrency,” ask the finance minister “whether the government is aware of the cryptocurrencies that are traded in India.” Minister Chaudhary responded:
Government does not collect information on trading in cryptocurrency.
The finance minister was also asked whether cryptocurrency trading is permitted in India and whether crypto exchanges are legal entities in the country. In addition, she was asked to detail any Acts applicable to cryptocurrency and crypto exchanges.
Minister Chaudhary replied: “Cryptocurrencies are unregulated in India. RBI [the Reserve Bank of India] has vide its circular dated May 31st, 2021, advised its regulated entities to continue to carry out customer due diligence processes in line with regulations governing standards for know your customer (KYC), anti-money laundering (AML), combating of financing of terrorism (CFT) and obligations of regulated entities under Prevention of Money Laundering Act, (PMLA), 2002 in addition to ensuring compliance with relevant provisions under Foreign Exchange Management Act (FEMA) for overseas remittances.”
Winter Session of Parliament Begins
The winter session of parliament commenced on Monday. A cryptocurrency bill is listed to be taken up during this session. However, the bill is not listed on the agenda for Monday or Tuesday.
“The Cryptocurrency and Regulation of Official Digital Currency Bill 2021” seeks “to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses,” according to the legislative agenda for the winter session of Lok Sabha.
The bill also provides “a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India.” The RBI has previously said that it is working on a digital rupee which it plans to launch in phases.
The Indian government has not made the content of the crypto bill public, which has led to much speculation about whether the government will ban cryptocurrencies, like bitcoin and ether, or provide a regulatory framework for them.