Crypto may be allowed as asset, not as currency; legislation being finalised

Economic Times, November 17, 2021

The government is unlikely to shut the door on cryptocurrencies and instead take a nuanced approach. They may not be permitted as currency to settle transactions and make payments but could be held as an asset like shares, gold or bonds.

Active solicitation by companies including exchanges and platforms would be barred, people with knowledge of the matter told ET.

The government is finalising legislation that will pave the way for regulation of crypto asset trading while barring the use of virtual currencies for payments and transactions.

“Active solicitation would not be permitted… Details of the bill are being finalised,” a government source said.

The legislation that’s in the works could be taken to the cabinet for consideration in the next two to three weeks, the person said.

The Securities and Exchange Board of India (Sebi) could be designated as the regulator, although a final call is yet to be taken. “Discussions on regulation are going on,” the person said.

Working on Taxation Aspects

The government is also working on the taxation aspects and the upcoming legislation is expected to address this, the person added.

The government is looking to introduce the bill in the upcoming winter session of Parliament. ET had on November 8 reported that the government is likely to take the middle path on cryptocurrencies and not opt for an outright ban.

A person aware of discussions at a meeting chaired by Prime Minister Narendra Modi on cyrptocurrency Saturday said that the overall view within the government is that the steps taken should be proactive, “progressive and forward-looking” as it was an evolving technology.

The parliamentary standing committee on finance that met crypto industry representatives on Monday also seemed to favour regulation and not a complete ban, the stand espoused by industry representatives.

The Reserve Bank of India (RBI) has expressed concerns over cryptocurrencies posing a threat to macroeconomic and financial stability as well as capital controls. It is understood to favour a ban in view of this.

RBI governor Shaktikanta Das reiterated Tuesday that the number of cryptocurrency accounts in India appears to be exaggerated. At a State Bank of India event on Tuesday in Mumbai he said there was need for a deeper discussion on cryptocurrencies and was yet to see well-informed debate on key concerns, some of which had been raised by the RBI.

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