A Bill that bothers cryptocurrency investors

Though the govt is yet to officially release the draft Bill, reports suggest that the Bill includes appointing the Sebi to oversee cryptocurrencies, as the govt considers classifying these as financial assets. Another salient feature of the Bill, according to reports, is that it will give crypto holders a deadline to declare their assets and meet any new rules

Even as the budget session of Parliament is scheduled to begin on January 31, one big question that is bothering the investors of the cryptocurrency is whether the central government will introduce the much talked about Cryptocurrency Regulation Bill in this session. Earlier, the government had listed the Cryptocurrency Regulation Bill for its introduction in the Lok Sabha in the winter session itself but that did not happen because of several reasons.

The budget session of Parliament will start on January 31 and conclude on April 8. The first part of the session will end on February 11. After a month-long recess, the second part of the session will begin on March 14 and conclude on April 8.

Officially christened as 'The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021', the Bill seeks a ban on all private cryptocurrencies including mining and trading therein. According to the government bulletin the Bill is being introduced 'to create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India (RBI). The Bill also seeks to prohibit all private cryptocurrencies in India. However, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.' The Bill further seeks to promote the 'official digital currency' that is to be issued by the Reserve Bank of India (RBI).

Even though cryptocurrencies have several benefits, the Indian government, for that matter a large number of governments world over, is sceptical of considering them as legal tender because of the inherent risks involved in trading of these currencies, especially the privacy issue. In fact, the RBI has consistently been raising concerns about private digital currencies, citing macroeconomic and financial stability issues. Since the cryptocurrencies are based on blockchain technology, which is highly secure, a wallet is linked to a private key rather than an individual person. Therefore, the governments find it challenging to trace the origin of a transaction. As these currencies use other names to carry out transactions, it has the potential of being used for illegal activities.

It is a known fact that so far the cryptocurrencies are not backed by any government or any commodity. So there is a major concern among the governments that since these currencies are not backed by government or any commodity, there is a high probability that these currencies can lose their value if the promoter of the specific cryptocurrency stops trading activity. The latest example is Squid Game Crypto Scam, where it is estimated that the promoters scammed an estimated $3.38 million, by drawing in buyers and thereafter stop trading, leaving the buyers with tokens which have no financial value.

It is under this background, the Indian government is bracing up itself to introduce the Cryptocurrency Regulation Bill which proposes a penalty for violations by individuals as well as corporate bodies.

Though the government is yet to officially release the draft Bill, reports suggest that the Bill includes appointing the Securities and Exchange Board of India (Sebi) to oversee cryptocurrencies, as the government considers classifying these as financial assets. Another salient feature of the Bill, according to reports, is that it will give crypto holders a deadline to declare their assets and meet any new rules. Besides, the Bill is likely to use the term 'cryptoassets' instead of 'cryptocurrencies' and a one and half year jail term or a fine of Rs 20 crore for any violation of the rules which are to be finalized.

(The author is freelance Journalist with varied experience in different fields)