The government will take a nuanced and distinctive approach to cryptocurrencies rather than banning them. Cryptocurrencies may be allowed as an asset such as shares, bonds, or gold. They are unlikely to be accepted as a currency to settle transactions and make payments.
Active solicitation by companies, including platforms and exchanges, will not be permitted. The government is finalizing the legislation and details of the bill. The bill will direct as to how to regulate cryptocurrency trading while barring virtual currency as legal tender.
The bill in progress might be taken to the Cabinet in the next two or three weeks for approval. SEBI (Securities and Exchange Board of India) might be the apex institution supervising the working of the crypto assets.
Why isn’t crypto treated as currency?
RBI has red-flagged issues regarding cryptocurrencies. RBI is solely authorized to issue currency in India. Hence, the government will not permit to buy and sell anything with crypto.
Crypto formation takes place with the help of mining which requires a lot of hardware and resilient software. The mining process helps to create and verify the crypto assets.
Cryptocurrencies are not backed or supported by the government or a group of countries. They cannot be treated as a ‘private asset’ as they do not have an owner or issuer.
Defining the cryptos is still in progress. They can either be categorized based on the technology used or on their end-use. It will help to treat cryptos correctly in the books of accounts.
But correctly taxing the cryptos is also necessary. The government is working on the taxation aspects, and the bill will address the same.
The government will introduce the bill in the parliament in the winter session. They are likely to consider a mid-path rather than shutting the door on cryptocurrencies.
PM Narendra Modi also mentioned that crypto is an evolving technology, and hence government will take proactive and progressive steps.
The Reserve Bank of India (RBI) favours banning cryptocurrencies as it expressed concerns over cryptos as a threat to financial and macroeconomic stability.
Shaktikanta Das, governor of RBI, expressed his concerns over the excessive number of crypto accounts. There is an ongoing discussion on cryptocurrencies and a well-informed debate on various issues.