New Delhi: Even as conflicting views over the government’s response to regulating cryptocurrencies remain unresolved, the Narendra Modi government is veering around to the idea of allowing citizens to hold cryptocurrencies as an asset class and not as a form of currency.
Highly placed sources told India Ahead that while last-minute tweaking of the proposed legislation aimed at putting in place a regulatory mechanism to deal with the unchecked growth of cryptocurrencies is currently on, there is pressure on the government to introduce the Bill in the ongoing Winter Session of Parliament.
“In view of the strong views expressed by the Reserve Bank of India, there is consensus that cryptocurrencies shouldn’t be allowed as a substitute to the existing forms of currency in the country. However, the same can be allowed to be held as an ‘Asset Class’, which means you can have it just like shares. If you make profit, you pay taxes as you would pay on sale of stocks,” said the source.
It is learnt that the Bill drafted by the Finance Ministry has undergone several revisions and is ready to be placed before the Union Cabinet when it meets this Wednesday. If the Cabinet grants its approval, the same can be then introduced in the ongoing Session.
According to the source, the government plan is to empower the Securities and Exchange Board of India (SEBI) to have the power of oversight over the functioning of various crypto trading platforms so as to ensure a level and transparent playing field and also prevent gullible citizens from being taken for a ride.
While individual investors would be able to invest in cryptocurrencies through trading platforms, there would be a bar on them mining, generating or selling such currencies on their own.
Simply put, investors wouldn’t be able to use these currencies as a form of currency. In fact, doing so would be a penal offence, leading to a jail term or fine or both.
The source also said that the proposed bill would allow those currently holding such currencies to come forward and declare their holdings within a given time-frame.
The same source also said in view of the fact that a large number of Indians have already invested a lot of money in cryptocurrencies – either directly or through trading platforms, many of which have mushroomed in the last few months, the government understands the need to act without much delay to put in place a regulatory mechanism.
On December 10, Prime Minister Narendra Modi, while speaking at a virtual summit hosted by US President Joe Biden, asked the world to “jointly shape global norms for emerging technologies like social media and cryptocurrencies so that they are used to empower democracy, not to undermine it”.