meity proposes amendment to it rules 2021

Government’s Take on Cryptocurrency Bill

The Lok Sabha has released its Parliamentary Bulletin (“Bulletin”) on January 29, 2021.

The Bulletin prescribes the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021(“Cryptocurrency Bill”) as government legislative business which is expected to be taken up during the 5th session of the 17th Lok Sabha, 2021.

Indian government’s engagement with cryptocurrency has been going on since April 2018 when the Reserve Bank of India (“RBI”) had released a circular prohibiting the entities that were regulated by the central bank to deal in virtual currencies.

The said circular was overturned by the Supreme Court of India in the case of Internet and Mobile Association v. Reserve Bank of India on March 4th, 2020, which showed a first relief path for cryptocurrency businesses in India.

However, since then neither the RBI nor the Ministry of Finance has taken any action or provided any clarity on the regulatory issue for cryptocurrencies in India.

The Bulletin defines the purpose of the Cryptocurrency Bill to “create a facilitative framework for the creation of official digital currency to be issued by the Reserve Bank of India” and “prohibit all private cryptocurrencies in India”.

However, the Cryptocurrency Bill would allow certain exceptions to “promote the underlying technology of cryptocurrency and its uses”. This shows that the government is in the process to create a regulatory framework for introducing a digital currency in India.

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