Government Reviewing Key Parts Of Cryptocurrency Bill—BQ Exclusive

In 2017, the government had set up a committee led by the then Economic Affairs Secretary Subhash Chandra Garg to study the issues related to virtual currencies. The committee, in its final report made public in 2019, had recommended a complete ban on private cryptocurrencies. The same committee had also pitched for the introduction of an official digital currency issued by the Reserve Bank of India.

Since then much has changed.

A 2018 circular from the Reserve Bank of India barring regulated entities such as banks from dealing with cryptocurrency-related businesses and customers was struck down by the Supreme Court.

Besides, global interest in cryptocurrencies has been rising and networks such as Mastercard and Visa are working to accept select tokens via their networks.

Locally, too, trading in cryptocurrencies is believed to have surged, although data on the extent of such trades is not available.

The review of the planned legislation takes place against that backdrop.

The idea is to introduce amendments to the existing Bill itself considering the evolving situation, the person cited earlier said.

The government has also taken into account the central bank’s recent advisory on cryptocurrencies. While the RBI clarified that its 2018 circular is no longer valid, it asked banks to continue doing due-dilligence of cryptocurrency related businesses under “Know Your Customer” and “Anti Money Laundering” rules. In statements, thereafter, RBI Governor Shaktikanta Das said the central bank continues to have “major concerns” around cryptocurrencies.

Last week, the Enforcement Directorate also sent a show cause notice to WazirX, one of India’s largest cryptocurrency exchanges. In its notice, the ED, said cryptocurrencies are “money” for the purpose of India’s Foreign Exchange Management Act or FEMA. As such, all rules and requirements under FEMA will be applicable to these tokens.