India's crypto bill is unlikely to be up for discussion this month — and it may be a while before we see it in Parliament

India's crypto bill is unlikely to be up for discussion this month — and it may be a while before we see it in Parliament
India's Finance Minister, Nirmala Sitharaman, had said that the crypto bill was waiting for Cabinet approval in an interview earlier this monthBI India
  • India’s crypto bill has not been listed as one of the legislative matters up for discussion during the Monsoon Session of Parliament, which will begin on July 19.
  • According to IndiaTech CEO, Rameesh Kailasam, the government is still in the process of determining whether or not to set up a new committee.
  • The government is seeking middle ground and not an all-out ban on cryptocurrencies, as proposed by the crypto bill that was supposed to be tabled during the Budget Session of Parliament earlier this year.
India’s uncertainties around cryptocurrencies won’t be going away anytime soon. The Monsoon Session of Parliament, which is set to kick off next week on July 19, does not list virtual currencies as a matter that could ‘tentatively’ be up for discussion.

“The likelihood of the bill getting placed in the parliament during the upcoming session is limited,” Rameesh Kailasam, the CEO of IndiaTech, told Business Insider. “The government seems to be still in the process of determining the way forward, which may through either an existing committee or a new one with industry consultation where required."

India’s Finance Minister, Nirmala Sitharaman, had hinted earlier this month that all the crypto bill needed was approval by the Cabinet — the supreme decision-making body of the Indian government — before being put up for debate in Parliament.

The bill’s absence from the roster implies that either the Cabinet did not have time to go through the bill or it was sent back to the Ministry of Finance for revision.

And, according to Kailasam, India’s apex banking institution — the Reserve Bank of India (RBI) — and the Indian government may not be on the same page anymore.

"Considering the Supreme Court had lifted the ban on cryptocurrencies and subsequently the onus was on RBI and the government of India to bring in necessary regulations. Therefore a ban route may not be ideally plausible," he said.

There’s a new committee to regulate cryptocurrencies in the making

Any regulation around cryptocurrencies will require participation from multiple ministries. The earlier committee, headed by the former Finance Secretary Subhash Garg, had stakeholders from the Ministry of Electronics and Information Technology (MeitY), the Securities and Exchange Board of India (SEBI), the Department of Economic Affairs (DEA), and the RBI.

“The government seems to be looking at this afresh considering that there needs to be a different take on how to regulate cryptocurrencies rather than push for an outright ban” said Kailasam. So, if the bill has to be rewritten, there needs to be a new committee put in place. Back in May, the Economic Times had also reported that a new panel may be being set up to study India’s crypto regulations.

Once members are finalised, the committee will then draft a new version of the bill, which will have to be approved by the Ministry of Finance followed by the Law Ministry. And, that’s when the Cabinet finally gets a look at it. If the Cabinet wants revisions, the bill goes back to the committee — but even if they approve it, it can’t just be presented in Parliament. It has to first be put up for public consumption and take in any comments or suggestions.

It’s only once it manages to get through all that red tape can the bill finally be listed for approval by Parliament.

The Indian government may be softening its stance on cryptocurrencies — RBI still unsure

The RBI does not have a history of being crypto-friendly. In 2018, it restricted banks from engaging in crypto transactions or providing crypto services — a ban that was overturned in 2020 by the Supreme Court, which deemed it ‘unconstitutional’.

However, the apex banking institution has refrained from giving its blessing to private cryptocurrencies. As a result, most banks in the country have also chosen to keep their distance from crypto exchanges and other services.

In March, during the Budget Session of Parliament, the government had planned to introduce a bill that would allow the RBI to set up a centralised cryptocurrency while also banning all ‘private’ cryptocurrencies.

“When the crypto bill was going to be introduced during the Budget Session of Parliament, both the RBI and the government may have been on the same page,” Kailasam explained. “But now — with the traction digital assets have gained over the last six months, detailed industry recommendations , and the Supreme Court’s judgement to ‘not’ ban cryptocurrencies in the limelight — the government is looking for a middle path with regulation.”

The crypto industry has also been looking for new ways to reach out to the government, like forming a second lobby under IndiaTech, to push for self-regulation.

For a more in-depth discussion, come on over to Business Insider Cryptosphere — a forum where users can deep dive into all things crypto, engage in interesting discussions and stay ahead of the curve.

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