January 21, 2022

Former Indian Finance Secretary Doubts Government Understands Cryptocurrency

The cryptocurrency bill that had been listed for discussion in the winter session of the Indian Parliament has not been brought up by the government. Subhash Chandra Garg, the former finance secretary, said that he does not have any confidence in the ability of the Indian government to understand cryptocurrency. Garg had been leading the inter-ministerial committee, which had drafted the original crypto bill that had proposed imposing a ban on cryptocurrencies, such as bitcoin. The winter session of the lower house of the parliament, called Lob Sabha, came to an end on Thursday. 

Speaking about the failure of the Indian government in introducing the bill, Subhash Chandra Garg said that he didn’t have any confidence in the ability of the government in figuring out the complexities associated with crypto. He added that he had had serious doubts when the government had expressed its intention of presenting the bill in the parliament’s winter session. Therefore, he said that he wasn’t surprised at the lack of clarity provided by the government regarding the bill. The Indian government has not disclosed the details of the cryptocurrency bill. However, reports indicate that the government has decided to regulate cryptocurrencies, but plans on banning the use of crypto as a method of payment.

Nirmala Sitharaman, the finance minister of the country, had recently stated that they needed to rework the bill. Headed by Garg, the inter-ministerial committee (IMC) had drafted the original crypto bill. According to the ‘Banning of Cryptocurrency and Regulation of Official Digital Currency Bill 2019’, all cryptocurrencies were to be banned and digital currencies issued by the Reserve Bank of India (RBI) were to be regulated. Having resigned from his government job, Garg believes that crypto-assets need to be regulated as commodities.

This is the second time that the Indian government has listed a crypto bill on its parliamentary agenda and not introduced it. They had done the same in February in the budget session. Garg said that the Indian government appears to be caught between two opposing sides; the crypto industry and the RBI. He said that the government doesn’t seem to be able to make a decision. He said that the central bank of India has constantly been hammering the government to impose a ban on crypto and to empower the RBI for issuing digital banknotes. At its recent meeting, the RBI’s central board of directors said that cryptocurrencies should be banned in the country and emphasized that a partial ban will not be effective.

Shaktikanta Das, the Governor of the RBI, has mentioned several times that the central bank has some prominent reservations regarding cryptocurrencies. Garg said that crypto exchanges were applying the force from the other side and wanted cryptocurrencies to be treated as assets. They want the government to create a regulatory mechanism for these cryptocurrencies. Garg also stated that there were other critical issues facing the government, which include crypto being misused for money laundering and hawala, worth billions of dollars, and crypto investors not paying any taxes. 

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