According to a former finance secretary, there is still much too much unknown about the new crypto law for investors to fear the worst.
The agenda for the winter session of the Indian parliament, which includes a bill that “seeks to abolish all private currencies,” may be deceptive, former finance secretary Subhash Garg told News18 on Tuesday. Because the draught measure has not been publicised or made accessible to legislators, it is uncertain how “private cryptocurrencies” would be defined. As a result, Garg added, the bill’s depiction as a crypto prohibition was “perhaps a mistake.”
Garg prepared the 2019 crypto law on which the current one is based. The 2019 draught proposed a blanket prohibition of all cryptocurrencies and specified fines and prison time for violations. Garg’s position on cryptocurrencies seems to have shifted since then, as he described crypto assets in the News18 interview as “a good instrument for mankind.”
Garg said that the 2019 law aimed to restrict the use of cryptocurrency as a method of trade. However, Garg said that the “blockchain world of cryptocurrencies is much larger now,” and the new law must address characteristics of digital assets other than their role as a currency.
Garg also said that defining cryptocurrencies as assets is a “huge error” – treating cryptocurrencies as assets is “far too simplistic,” he stated.
While the proposed law for 2021 attempts to establish the foundation for India’s central bank digital currency, Garg said that implementing a CBDC needs resolving multiple technical issues. CBDCs, for example, may be kept in mobile wallets and used to make payments. However, hardly everyone in India has a smartphone. As a result, Garg said, establishing a CBDC that is inclusive of all stakeholders is a challenging process.
Additionally, Garg raised reservations about the law being tabled during the current session of parliament. “I’m not sure when [the] crypto law will be introduced. The bill has not yet been drafted. It has not been discussed by the cabinet, and as a result, I have serious misgivings about its introduction,” Garg added.
It is worth noting that the bill was previously included on the parliamentary budget session agenda but was never introduced. Finance Minister Nirmala Sitharaman said during Tuesday’s parliamentary session that the bill would be submitted when it is approved by the union cabinet.
She stated that non-fungible token legislation is also being considered, and that no decision has been made about the prohibition of crypto advertisements. “No decision has been made about the prohibition of its ads. However, initiatives are being done to raise awareness via the Reserve Bank of India and the Securities and Exchange Board of India,” she added, referring to the Reserve Bank of India and the Securities and Exchange Board of India.
Last month, at the prime minister’s meeting and the first parliamentary hearing on cryptocurrency, the effect of crypto advertisements, which many thought deceptive, was widely addressed. As a consequence, Bitbns and WazirX suspended advertising. However, it is important to remember that the first legislative meeting on cryptocurrency concluded with an agreement on regulation, not a prohibition.
Sitharaman has also repeatedly promised the crypto community that India would not ban cryptocurrency. This did not deter investors from panicking when the bill was placed on the legislative agenda. By Monday morning, Bitcoin and Ethereum values had fallen roughly 24% in less than 24 hours and were trading at a discount to the worldwide market. Numerous investors started researching measures to safeguard their funds, such as transferring them to a hard wallet or withdrawing them from Indian exchanges.
However, cryptocurrency exchanges have remained mainly bullish. Both CoinDCX and ZebPay have said that they anticipate favourable government regulation. Despite regulatory uncertainties, Singapore-based Coinstore launched business in India this week.
Whatever the proposed law entails, India’s retail crypto investors are nervous – even those who viewed last week’s slump as a chance to purchase. However, resolutions may take time. Legislation is a complex process, and even if a prohibition is enacted, there will almost certainly be an amnesty period during which investors may safely sell their holdings.
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