The Indian parliament has repeatedly asked the finance minister about the government’s plans for cryptocurrency. In July alone, the Ministry of Finance answered three sets of questions: two in Rajya Sabha, the upper house, and one in Lok Sabha, the lower house of the parliament.
Government Aware Crypto Growing More Popular
Indian parliament member Shri R. K. Sinha last week directed some questions at the finance minister at a sitting of the Rajya Sabha regarding the “Law for banning usage of cryptocurrency.” He asked on July 23 “whether [the] government has taken notice of the growing popularity of cryptocurrency.” Replying to this parliamentary question, the Minister of State in the Ministry of Finance, Shri Anurag Singh Thakur, simply said: “Yes, Sir.”
The question about cryptocurrency’s popularity was also asked in Rajya Sabha a week prior. Parliament member Shri Dharmapuri Srinivas similarly asked the finance minister on July 16 “whether [the] government has taken note about [the] prevalence of cryptocurrency in the country.” Thakur also replied: “Taking note of the issue, the government has constituted an Inter-Ministerial Committee (IMC) under the chairmanship of Secretary (EA). The IMC has submitted the report to the government.”
The Secretary of Economic Affairs (EA) at the time was Subhash Chandra Garg. However, on July 24, Prime Minister Narendra Modi reshuffled his top-level bureaucrats and replaced Garg with Department of Investments and Public Asset Management Secretary Atanu Chakraborty as the new EA Secretary. Garg has been appointed the new Secretary of Ministry of Power.
The IMC was constituted on Nov. 2, 2017, to study all the aspects of cryptocurrency and providing recommendations. Its report, dated Feb. 28, was made public on July 22. It contains a draft bill entitled Banning of Cryptocurrency & Regulation of Official Digital Currency Bill 2019. This bill has not been approved by the finance minister and has not been introduced in either house of parliament.
No Data Suggesting Crypto Mainly Used for Illegal Activities
A second question asked in Rajya Sabha on July 23 was “whether it is a fact that the cryptocurrency is primarily used for secret/illegal activities.” Thakur replied:
Cryptocurrency can be used for secret and illegal activities, but there is no data to corroborate that it is primarily being used for such activities.
In August last year, U.S. Drug Enforcement Agency special agent Lilita Infante admitted that illegal activity is no longer bitcoin’s primary use. “The ratio of legal to illegal activity in bitcoin has flipped … Now, illegal activity has shrunk to about 10 percent and speculation has become the dominant driver,” she said.
Law Preventing Use of Crypto
The bill which the IMC drafted proposes a ban on so-called “private cryptocurrencies.” As news.Bitcoin.com previously reported, the bill states that “Whoever directly or indirectly mines, generates, holds, sells, deals in, transfers, disposes of or issues cryptocurrency … shall be punishable with fine or with imprisonment which shall not be less than one year but which may extend up to ten years, or both.”
Parliament member Sinha asked on July 23 about “the steps being taken by [the] government to put a check on the usage of cryptocurrency in India,” and “whether [the] government is considering to bring any law or Act for prevention of the usage of cryptocurrency?”
To these two questions, Thakur reiterated that the government took note of this issue by constituting the IMC which has submitted its report to the government, adding:
The government is examining the draft report and bill submitted by the committee. However, at present, there is no separate law for dealing with issues relating to cryptocurrencies.
The Minister of State’s answer resembled the previous one he gave in Rajha Sabha on July 16 when parliament member Srinivas asked about “the action [the government has] taken against the persons who are responsible for running the cryptocurrency in the market?”
“Presently, there is no separate law for dealing with issues relating to cryptocurrencies. Hence, all concerned departments and law enforcement agencies, such as RBI, Enforcement Directorate and Income Tax authorities, etc. take action as per the relevant existing laws,” he clarified at the time. “Similarly, police/courts take action on IPC offences. Further, in view of the risks and dangers associated with cryptocurrencies, [the] government and RBI have been issuing advisories, press releases, and circulars to the public.”
Flawed Crypto Bill and Report
Since the IMC report was made public, the Indian crypto community has been vocal about how flawed the report is, as news.Bitcoin.com previously reported. The committee drafted this report without consulting any industry participants.
Sathvik Vishwanath, CEO of local crypto exchange Unocoin, shared with news.Bitcoin.com on Wednesday: “We were invited by NITI Ayog last year. Apart from this, it has always been us trying to approach government officials and departments to talk about crypto assets and the industry.” Noting that there was never any invitation to discuss the drafting of this bill, Vishwanath emphasized:
In the draft bill, there are many major flaws. They have a wrong understanding of the technology and usage of crypto assets.
He elaborated, “Even the reasons they have mentioned to create laws related [to the] ban of crypto assets is vague and incomplete,” noting that “If such a ban becomes the reality, the bill does not discuss its enforceability in detail.”
While the government can pass a law to ban cryptocurrency, “they won’t be able to control the crypto assets and transfer activity because it just happens over the internet on which government will not have direct control of,” Vishwanath told news.Bitcoin.com. “There are multiple ways to bypass any control they may forcefully put through ISPs and IP addresses. This also pushes the present crypto market into the black money market which is not good for the country. This also will hinder the progress of technology and innovation in the country over the long term.”
No Crypto Ban Currently
Thakur confirmed in Rajya Sabha on July 16 that there is currently no ban on cryptocurrency when parliament member Srinivas asked the finance minister “whether [the] government has prohibited cryptocurrency in the country.” Thakur simply replied, “No, Sir.”
Prior to the public release of the IMC report and draft bill, Lok Sabha also wanted to know if cryptocurrency will be prohibited in India. Parliament member Shri Gnanathiraviam S. asked on July 8 “whether the government has any proposal to ban cryptocurrency in India.” In his reply, Thakur explained that “The government has not recognized cryptocurrencies as legal tender,” adding that the IMC was “working to develop a framework for regulating cryptocurrencies.”
The IMC report has been submitted and presented to Finance Minister Nirmala Sitharaman. While she said in an interview with The Economic Times, published on July 29, that it is “a very futuristic and well-thought-out report,” she admitted, “I have not spent time on it after the presentation.”
What do you think of the answers the Ministry of Finance provided to the Indian parliament? Let us know in the comments section below.
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Image credits: Shutterstock and the Indian government.
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