Led by BJP MP and former union minister Jayant Sinha, a parliamentary Standing Committee on Finance held the first-ever meeting with industry associations and experts on cryptocurrency. Taking a progressive step forward, the panel unanimously agreed that cryptocurrency can not be stopped. However, it must be regulated to safe keep the people from potential scams.
With the parliamentary panel convening within a week of PM Modi’s meeting with industry experts regarding the digital currency, chances are high that the winter session of the parliament starting on November 29 might see the introduction of a draft bill seeking the regulation of cryptocurrency.
The bill aims to prohibit all private cryptocurrencies and lay down the regulatory framework for the launch of an ‘official digital currency. It will also set a 3-6 month exit period prior to banning the trading, mining and issuing of cryptos. RBI is planning to use DLT (Distributed Ledger Technology) to regulate the state-issued crypto coin.
State-issued cryptocurrency – the future:
Another indication came from Union Dy Director (Currency) Sanju Yadav, who in his correspondence with VHP leader Girish Bharadwaj affirmed that the centre will take a decision on a state-issued cryptocurrency soon, but will ban all private cryptocurrencies.
Mr. Yadav remarked, “Inter-ministerial committee (IMC) constituted under the chairmanship of secretary economic affairs to study the issues related to virtual currencies(VCs) and propose specifications to be taken in this matter recommended in its report that all private cryptocurrencies except any cryptocurrency issued by the State, be prohibited in India.”
He further added, “Further, the committee was of the view that it would be advisable to have an open mind regarding the introduction of an official digital currency in India. The government would take a decision on the recommendation of the IMC and the legislative proposal, if any, would be introduced in the parliament following the process”.
With reference to our letter addressed to Hon'ble Home Minister @AmitShah and Finance Ministry to ban Cryptocurrency, we have received response that all virtual currencies, except those issued by State is prohibited. pic.twitter.com/Z2QLjppdpH
— Girish Bharadwaj (@Girishvhp) November 15, 2021
Prime Minister’s meeting on cryptocurrency:
As reported by TFI, last Saturday (November 13) Prime Minister Narendra Modi chaired a review meeting involving various experts from financial as well as cryptocurrency markets.
According to the people aware with the minutes of the meeting, all stakeholders agreed on a strong need to stop young people from getting misled into crypto markets. The sentiments around stopping opaque advertising claiming sky-high returns were also strong in the meeting.
Prime Minister Modi also raised concerns about crypto currency’s possible use for money laundering and terror financing. A source was cited by Indian Express as saying, “The PM’s meeting discussed that unregulated crypto markets cannot be allowed to become avenues for money laundering and terror financing. The Government is aware that this is an evolving technology,”
What is Cryptocurrency? What is the buzz?
In the last few years, there has been much buzz around digital currencies, which includes cryptocurrency, virtual currency, and central bank digital currency. The volatility in the price of Bitcoin – the most popular digital currency of the world, has brought the discourse around digital currencies into popular discourse from the techno-financial world.
Given the central bank’s manipulation of the currency price by simply printing money, the libertarian block of the tech establishment always wanted to get rid of the government-regulated currencies, and this led to the creation of Bitcoin, Mazacoin, Titcoin, and so on.
However, given the fact that currencies have been one of the major functions of the government, the establishment is not ready to open it to the private players because it will lead to erosion of their power. Therefore, an emerging industrial powerhouse like India is still wary of privately held and traded digital currencies. However, the idea of a state-issued cryptocurrency has renewed the faith of the current government.
While the idea behind cryptocurrency is sound (the decentralization of the economy for a layman using blockchain technology), there is still considerable apprehension regarding the extreme volatility and feasibility of the digital currency in the current conventional economic setup.
Cryptocurrency – a reactionary market:
The cryptocurrency market has become a reactionary market, reminiscent of that of current stock markets, however, the volatility factor is dialled up by a few hundred notches. A certain Elon Musk can turn a ‘Doge’ meme into ‘Dogecoin’ and highly influence its value with a few tweets, within seconds.
It is pertinent to note that if any scam or problem arises for an Indian individual while dealing with cryptocurrencies, that individual does not have a lot of avenues to go to and plead his case. Thus, it is important that the government comes on board and helps give the little security cushion to those looking to take the plunge in the digital currency market.
Modi government’s push and the subsequent launch of digital currency, coupled with the growing size of the economy, would place India among the foremost global economic powers in the coming decade.