In the upcoming Winter Session of Parliament, the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, will be introduced. In the upcoming Winter Session of Parliament, the central government plans to introduce a bill on cryptocurrency to facilitate the creation of an official digital currency to be issued by the Reserve Bank of India (RBI).
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In addition, the bill seeks to outlaw all private cryptocurrencies in India. It does, however, allow for some exceptions in order to promote cryptocurrency’s underlying technology and applications. In the coming Winter Session, the Centre plans to introduce a total of 26 new Bills in the Lok Sabha.
Because currency notes and coins are backed by statute and regulated by the RBI in consultation with the government, the government was opposed to cryptocurrencies being treated as currency.
Despite its volatility and risks, the popularity of cryptocurrency has shown that it can be used by governments as a source of revenue. The earnings could also mean that services provided by digital currency operators will be subject to direct tax and GST. It has the potential to create jobs as well.
The RBI issued a circular on April 6, 2018, prohibiting banks and entities regulated by it from providing virtual currency services. The Supreme Court overturned the circular on March 4, 2021.
The RBI governor acknowledged that the value of cryptocurrency trading had increased, but added that “when the central bank says we have serious concerns about macroeconomic and financial stability, we have serious concerns.”
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“All of these cryptocurrencies were created by non-sovereigns and are, in this sense, entirely private enterprises,” the report stated emphatically. “There is no underlying intrinsic value of these private cryptocurrencies, as a result of which they lack all the attributes of a currency.”
The report also stated that these private cryptocurrencies have no fixed nominal value, implying that they are neither a store of value nor a medium of exchange. Cryptocurrencies have experienced extreme price fluctuations since their inception.
Cryptocurrencies, according to the SG Garg committee, cannot serve as a currency because private cryptocurrencies are incompatible with the essential functions of money/currency.
As a result, private cryptocurrencies cannot be used to replace fiat currencies, according to the committee.
Indian crypto exchanges and industry organisations recently released a joint advertisement claiming that crypto investments by Indians have surpassed Rs 6 lakh crore and that the number of investors has risen exponentially to over 10 crores.
Despite the fact that many of these investments are said to be micro and small, the government is not willing to take a tough stance.