International Tax Panorama

During this winter session of Parliament, the government of India is set to table the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021. The bill seeks to ban all private cryptocurrencies with ‘few exceptions’, the official document shared by the government says. It allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses. Thus the initial document doesn’t provide any clarity on these exceptions. It states that the decision has been taken to promote the official digital currency which will be issued by the Reserve Bank of India.

The Crypto bill is part of the 26 bills that the government plans to introduce in the winter session. The government was planning to ban all cryptocurrencies last year and was even planning to introduce a bill during this year’s Budget. However, the bill was scrapped, and a committee was formed to discuss the matter further with the stakeholders.

The Reserve Bank of India and Securities and Exchange Board of India have voiced concerns about the unregulated growth of cryptocurrencies in India, keeping vulnerable retail investors in mind. Security of investors’ money and misleading advertisements in the media regarding investment potential and risks have long been a cause of concern. The government has held several meetings with all stakeholders to discuss the regulation of digital currencies. Prime Minister Narendra Modi has also chaired a high-level meeting with officials from various ministries and RBI on the issue.

It’s worth mentioning that India is one of the biggest cryptocurrency markets in the world. A recent report suggested that the country has more than 10 crore crypto owners while homegrown crypto exchange platforms have maintained that around 2 crore Indians have invested in cryptocurrencies.