Finance Minister Nirmala Sitharaman on Tuesday said that the Government was working on a new Bill on cryptocurrency and that this Bill would be introduced in the ongoing session of Parliament after Cabinet approval.

The ongoing winter session of Parliament commenced on November 29 and is slated to end on December 23.

Replying to questions on cryptocurrency in Rajya Sabha today, Sitharaman said the new Bill takes into account the rapidly changing dimensions in virtual currency space and incorporates certain features of earlier Bill that could not be taken up.

‘Genuine intent’

She asserted that the government had “genuine intent” of introducing the Bill last time itself in the Monsoon session and that it would be incorrect to infer or conclude that the government would this time too not go ahead with enactment of law. “Once the Cabinet clears the new Bill, it will come into the House,” she said.

Sitharaman, however, did not indicate how the government intends to approach the issue of private cryptocurrency and whether the new Bill will look to ban private cryptocurrencies or not.

It may be recalled that a Bill on Cryptocurrency and Regulation of Official Digital Currency for introduction in the Lok Sabha had been recently included in the Lok Sabha Bulletin-Part II, as part of the government business expected to be taken up during the ongoing winter session.

According to the Lok Sabha Bulletin, the Bill seeks to create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India (RBI) for the ongoing winter session of Parliament. It also seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.

Asked if the government proposes to ban misleading advertisements on cryptos in the media, she told the Rajya Sabha on Tuesday that the guidelines of Advertising Standards Council of India are being studied and their regulations are also being looked into “so that we can take, if necessary, some kind of position or a decision to see how we can handle it”.

In a written reply to a few questions on cryptocurrency posed by Rajya Sabha members, Sitharaman said cryptocurrencies including non-fungible tokens are unregulated in India and the government does not collect data on transactions in cryptocurrency.

Crypto frauds

She also revealed that as many as eight cases of cryptocurrency frauds are under investigation by the Enforcement Directorate. “Further disclosure of information may not be in larger public interest”, she added.

Sitharaman also said the government, RBI and SEBI have been cautioning people about the cryptocurrencies that could be a “high risk” area and “more can be done” to create awareness.

A study was conducted by the government through a research firm on ‘Virtual Currencies: An Analysis of the Legal Framework and Recommendations for Regulation’ in July 2017. Thereafter, the government constituted an inter-ministerial committee (IMC) in November 2017 under the chairmanship of the secretary (economic affairs) to study issues related to virtual currencies and propose specific action to be taken in this matter.

The committee, inter-alia, recommended that all private cryptocurrencies be prohibited in India. The panel also recommended that it would be advisable to have an open mind regarding the introduction of an official digital currency in India.

Meanwhile, Minister of State for Finance Pankaj Chaudhary, said in a written reply that RBI has been cautioning users, holders and traders of virtual currencies vide public notices on December 24, 2013, February 1, 2017, and December 5, 2017, that dealing in virtual currencies is associated with potential economic, financial, operational, legal, customer protection and security-related risks.

Also, the RBI had, in a circular dated May 31, 2021, advised the regulated entities to continue to carry out customer due diligence processes for transactions on virtual currencies, in line with the regulations governing standards for know your customer, anti money laundering, combating of financing of terrorism, obligations under the Prevention of Money Laundering Act 2002, he said.

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