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India – No Proposal to Recognize Bitcoin: Treasury Department t …

(MENAFN- NewsBytes)

In a written reply in Lok Sabha, the Union Treasury Department said it does not collect data on Bitcoin transactions in India. The centre’s response came amid confusion in the crypto market over the new cryptocurrency law the government is seeking to introduce.

Takeaways Why is this story important?

A new bill banning cryptocurrencies has confused the sector as its details have yet to be released. Many expect the government to allow cryptocurrency investing and trading with certain restrictions. The center is also considering adopting an official digital currency instead. India probably has the largest number of cryptocurrency investors in the world.

Details Center on Banning Cryptocurrencies in India

The center has listed The Cryptocurrency and Regulation of Official Digital Currency Bill 2021 among the 26 bills it will introduce during the ongoing winter session of Parliament. The bill is supposed to ban the use of private cryptocurrencies with certain exceptions. It also aims to provide a framework for the Reserve Bank of India (RBI) to create a new digital currency.

CBDC RBI is working on the introduction of digital currency

The ministry said it received a proposal from the RBI in October to amend the RBI Act of 1934 to include digital currencies under the definition of “banknotes”. “The RBI has examined use cases and developed a step-by-step implementation strategy for the introduction of CBDC (digital central bank currency) with little or no interruption,” it said.

The CBDC Treasury Department lists the benefits of CBDC

In the same response, the Treasury Department also listed “significant benefits” that the CBDC “could offer”. These include a lower dependency on cash, a higher seigniorage due to lower transaction costs and a lower settlement risk, according to the ministry. The CBDC could also lead to a “more robust, efficient, trustworthy, regulated, legal tender-based payment option,” it said.

Market Crypto market falls after the bill is announced

India has an estimated 1.5 million cryptocurrency investors with collective investments of Rs. 45,000 million. After the center listed the cryptocurrency draft for that parliamentary session, the prices of almost all cryptocurrencies on Indian exchanges collapsed. Hours after it was listed on November 23, Bitcoin fell 17%, Ethereum 15% and Tether nearly 18%.

Background The RBI had previously banned crypto currencies

This is not India’s first attempt to regulate the crypto market. In 2018, the RBI had instructed financial institutions to sever all ties to individuals and companies that trade in cryptocurrencies. However, direction was reversed by the Supreme Court in 2020 as it violated the freedom of trade guaranteed by the Indian Constitution. Since then there have been talks about regulating the market.

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