By Kaushalya Venkataraman
This week has seen revived global interest in cryptocurrencies, with Elon Musk breaking headlines by investing more than $1.5 billion in Bitcoin. In India, however, cryptocurrencies (such as Bitcoin and Ether) are currently trading at a discount.
This is largely because cryptocurrencies have been operating in a regulatory grey area. In 2013, the Reserve Bank of India raised concerns over the potential financial, operational, legal and consumer protection risks emanating from crypocurrencies. In 2018, the central bank issued an order stating that banks and financial institutions shall not deal with crypto-related businesses, and all regulated entities falling within the purview of RBI shall stop providing services to such platforms. The Supreme Court struck down the provisions which literally banned crypto-trade in 2020.
Meanwhile, the government has sought to introduce draft bills to regulate/ban cryptocurrencies. The ‘Cryptocurrency and Regulation of Official Digital Currency Bill, 2021’ is to be tabled before Lok Sabha in this session. The latest bill seems slightly more positive and forward-looking than the previous one, titled the ‘Banning of Cryptocurrency and Regulation of Official Digital Currency Bill, 2019’. It seems to suggest that instead of an outright ban, the government intends to regulate cryptocurrencies.