In the winter session of Parliament, which began today, the government is expected to introduce a measure to regulate cryptocurrency. Bitcoin and other cryptocurrencies are based on blockchain technology, which is a decentralised ledger of transactions.
On Monday, Union Finance Minister Arun Jaitley stated in Parliament that the central government does not gather any information on bitcoin transactions. It further stated that there is no plan in the country to recognise bitcoin as a currency.
The response came in the form of a written reply to a query about cryptocurrency in the Lok Sabha. The winter session of Parliament, which began on Monday, will debate legislation aimed at regulating Bitcoin.
The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, aims to establish a framework for the Reserve Bank of India to govern digital currency (RBI).
The law will also attempt to restrict all private cryptocurrencies in India, with limited exceptions to encourage the underlying technology of cryptocurrency and its use, according to the Lok Sabha website.
Currently, there is no cryptocurrency legislation or prohibition in the country.
Prime Minister Narendra Modi attended a meeting with senior officials earlier this month to examine the matter. This month, the Standing Committee on Finance, chaired by BJP leader Jayant Sinha, met with officials from crypto exchanges, blockchain, and the Crypto Assets Council (BACC), among others, and came to the decision that cryptocurrencies should not be prohibited, but rather regulated.
The Reserve Bank of India has consistently stated its opposition to cryptocurrencies, claiming that they represent severe challenges to the country’s macroeconomic and financial stability, and that the number of people trading on them and their reported market value are both suspect.
The RBI had announced its intent to come out with an official digital currency in the face of the proliferation of cryptocurrencies like bitcoin.
Cryptocurrencies work on blockchain technology – a decentralised ledger of transactions. This isn’t maintained or stored in one place or with any central authority. Instead, it is spread across a network of computers, also known as peer-to-peer networks.
This system is used to authenticate transactions done using crypto coins.