Finance Minister Nirmala Sitharaman on Monday said the Government has no plans to accredit Bitcoin as a legal tender in the country.
Further, the junior minister for finance, Pankaj Chaudhary, on being asked about the status of cryptocurrency trading in the country, elaborated that the government does not collect any information on the trading of the unregulated asset.
He was asked if the government was aware of the enormous environmental impact associated with mining cryptocurrency, he replied in the negative. The Member of Parliament from Maharajganj (U.P.) was answering queries raised in the lower house on the existing state of cryptocurrency in the country on the first day of the Winter Session.
The Maharajganj MP informed the lower house of the parliament that the government would decide the road ahead with regards to cryptocurrency based on the recommendation of a high-level inter-ministerial committee and the legislative proposal if introduced in the parliament. He told the Lok Sabha that the committee had proposed specific actions including the proposal to prohibit all private cryptocurrencies, except those issued by the state.
According to him, a high-level interministerial committee was set up under the chairmanship of the Secretary of Economic Affairs to, "study the issues related to virtual coins and propose specific actions to be taken in this matter recommended in its report that all private cryptocurrencies, except any cryptocurrency issued by the State, be prohibited in India."
Member of Parliament from Mandya (Karnataka), Sumlatha Ambareesh asked MoS Finance to furnish details if there was an existing ban on bitcoin trading in the country. He answered that the Reserve Bank of India had in a circular dated April 6, 2018, asked all entities regulated by it to not deal with or provide services pertaining to virtual coins. "However, the Hon'ble Supreme Court, vide judgement dated March 4, 2020, in WP (C) No. 528 of2018 and WP (C) No. 373 of2018, had set aside the above circular dated April 6, 2018," he added.
The Minister of State for Finance reminded the lower house of the 2018-19 Budget Speech which mentioned that the government does not consider cryptocurrency as a legal tender. In addition, the government would take all measures to eliminate the use of the unregulated asset in financing illegitimate activities or as part of the payment system. It would instead explore alternate uses of blockchain technology to further the digital economy.
Member of Parliament from Thiruvananthapuram, Shashi Tharoor enquired if there are laws in place for the regulation of the asset and protecting crypto-traders and investors. To which, Chaudhary answered that all entities regulated by the RBI are advised to carry out due diligence process before enrollment. This includes, Know Your Customer (KYC), Anti-Money Laundering (AML), Combating of Financing of Terrorism (CFT) and obligations of regulated entities under Prevention of Money Laundering Act, (PMLA), 2002 in addition to ensuring compliance with relevant provisions under Foreign Exchange Management Act (FEMA) for overseas remittance. "Depending upon the nature of the fraud, various laws including the Indian Penal Code 1860, are in place for protection against fraud," he stated.