Junior minister for finance Anurag Singh Thakur told Parliament that regulatory agencies such as the RBI and Sebi did not have legal framework to directly regulate cryptocurrencies as they are not currencies, assets, securities, commodities issued by identifiable users.
“…the government does not consider cryptocurrencies legal tender or coins and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system. The government will explore use of the blockchain technology proactively for ushering in digital economy,” Thakur said in response to a question by Shiv Sena MP Sanjay Raut.
In response to a question from former Bihar deputy chief minister Sushil Kumar Modi, finance minister Nirmala Sitharaman said that a high-level inter-ministerial committee (IMC) headed by former economic affairs secretary Subhash Chandra Garg had proposed to prohibit all private cryptocurrencies, except those issued by the state. “The government would take a decision on the recommendations of the IMC and the legislative proposal, if any, would be introduced in Parliament,” the minister said.
The government has already listed the bill among the legislations planned for the current session of Parliament, although officials said that the consultation process is still underway. One of the key issues is the definition of “cryptocurrency” with several private players cautioning the government against a legislation.
Even within the government there is a section that believes that a ban may not be the best option given that traders often use technology to beat the restriction. While money laundering and terror financing are major concerns, the unregulated cryptocurrency exchanges have brought in some sort of KYC norms, arguing that they are “self-regulating”.