In an interview with The Hindu, India’s Finance Minister, Nirmala Sitharaman, has reiterated the need for regulations. The new crypto regulations will have a ‘window’ for fin-tech startups to experiment, she added.
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As of now, there are no regulations governing cryptocurrency in India. However, the government is mulling on tabling a new crypto bill for ratification in the following monsoon session of the parliament.
The growing crypto popularity in India
According to a report run by Chainalyis, India’s investments in crypto grew from nearly $200 million in 2019 to $40 billion in 2020.
Today, CoinSwitch Kuber, India’s most trusted trading exchange, accounts for nearly 50% of all the 15 million crypto investors in the country.
What has the government’s stance been so far?
Amid the rising popularity, the govt has been taking a ‘calibrated’ approach towards digital currencies.
In 2020, the Supreme Court struck down a 2018 RBI circular banning all regulated entities from using cryptocurrencies. This opened a replacement era of crypto boom within the country
Following the RBI ban, in 2019, the Finance Ministry Committee on Virtual Currencies recommended a draft bill to manage cryptocurrencies. The draft involved an absolute ban on ‘private cryptocurrencies’ and has since been in cold storage.
Nonetheless, this 2021 bill prepared after a niche of two years has been revamped and reworded to suit the present sentiment of investors and fintech startups.
The FM has time and again ruled out an entire ban.
The Proposed Bill
The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 aims to manage the crypto space while introducing a politician digital currency. Explicit implications of the bill on crypto fintech space are still unknown.
Though no clear information is out there on the provisions of the proposed law, financial institution Digital Currency (CBDC) are going to be issued by RBI. CBDC are going to be a digital sort of fiat currency supported blockchain technology.
What can be expected from the proposed bill?
Bitcoin has increased in value by over 6 times within the past 12 months. The high short-term returns have attracted an outsized chunk of millennials as first-time investors into any asset.
Understandably, the govt is mulling over regulations which will make crypto investment safe and well-informed of the risks involved.
Regulations instead of an outright ban would be the central theme of the proposed bill.
An effective oversight mechanism by regulatory authorities will assure investor protection while addressing problems with financial irregularities including evasion , terror funding and concealment .
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