As Centre prepares to present the Union Budget for 2022-2023, economic experts have been anticipating the Modi govt’s policy regarding banning or legalising cryptocurrency. While it remains unclear if the Centre will introduce the Cryptocurrency and Regulation of Official Digital Currency Bill in the upcoming Budget session of the Parliament, crypto companies expect a legal framework to be announced by Finance Minister Nirmala Sitharaman in her Budget speech on February 1. The Union Budget will be presented on February 2 in a paperless format and the Parliament session will be held in 2 parts – February 1 to February 11 and March 14 to April 8.
Budget 2022: What to expect on Cryptocurrency
Market experts are expecting Union Finance Minister Nirmala Sitharaman to clearly state the tax structure under which incomes in cryptocurrencies will be regulated. Moreover, experts seek clarification from the Centre, if cryptocurrency transactions must be reported in companies/individuals’ financial transactions. The Centre may also task the regulatory body Securities and Exchange Board of India (SEBI) to regulate the transactions of cryptocurrency, trade, sale, purchase of the cryptocurrencies sanctioned by the Centre. Crypto investors also expect Centre or Reserve Bank of India (RBI) to elaborate on its its plan to introduce Central Bank Digital Currency (CBDC).
In the winter session, Sitharaman told Lok Sabha, “Introduction of CBDC has the potential to provide significant benefits, such as reduced dependency on cash, higher seigniorage due to lower transaction costs, reduced settlement risk. There are also associated risks which need to be carefully evaluated against the potential benefits”. She stated that CBDC will not have volatility associated with private cryptocurrencies as it will be backed by the RBI. The Centre sought more time to introduce the Cryptocurrency Bill in Parliament, skipping it in the Winter session.
Clauses in Cryptocurrency and Regulation of Official Digital Currency Bill
The Bill seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses. Centre will also set a 3-6 month exit period prior to banning the trading, mining and issuing of cryptos. The govt is planning to regulate cryptocurrency and get it under the Centre’s tax structure.
Recently, many MPs raised concerns in the Parliamentary Standing Committee’s meeting on the new law. The most serious concern raised by MPs was the security of investors’ money highlighting the full-page cryptocurrency advertisements in national dailies. Moreover, many MPs have opined that banning cryptocurrencies will be ‘taking it too far’, batting for regulatory control. They have suggested that if one gets defrauded in crypto, there should be an option to take the complaint to some regulatory body.
At the Sydney Dialogue, PM Modi too opined, “It (global collaboration between countries) should also recognise national rights and at the same time, promote trade, investment and larger public good. Take cryptocurrency or bitcoins for example. It is important that all democratic nations work together on this and ensure that this does not end up in wrong hands, which can spoil our youth”.