India says there are no plans to recognise Bitcoin as currency

The Indian government does not plan to recognise Bitcoin as a currency and is not collecting data on transactions involving the asset. This was stated by Finance Minister Nirmala Sitharaman during the opening of the winter session of parliament.

Among other bills, parliamentarians are set to consider a cryptocurrency regulation bill, which is reportedly to be presented by February 2022.

According to media reports, the government will propose a ban on using cryptocurrencies to make payments, but will allow trading and holding as assets, such as stocks, bonds and gold.

Subsequently there were reports about plans by the authorities to ban most “private cryptocurrencies”. News of introducing such a proposal became known as early as September 2020, and in March media reported on the possibility of criminal prosecution for possession of cryptocurrencies. At that time Sitharaman rejected such government intentions.

Despite legal uncertainty surrounding cryptocurrencies, a Singapore-based Bitcoin exchange Coinstore expanded its platform and app to India. The company also announced openings of offices in three cities — Bengaluru, New Delhi and Mumbai.

Coinstore allocated $20 million for hiring staff, marketing, and product development for the Indian market.

“There have been political wranglings, but we hope everything will turn out well, and we are optimistic that the Indian government will develop sound rules for cryptocurrencies,” said a representative of the exchange.

On the first day of the parliamentary session, questions were also raised about plans to introduce a central bank digital currency (CBDC), according to The Economic Times.

The Ministry of Finance, in response, informed lawmakers that the Reserve Bank of India (RBI) is developing a phased strategy for the rollout of a CBDC and is examining use cases.

Regarding the motives for launching a national digital currency, the ministry said:

“The aim of creating a digital currency is to deliver significant benefits, such as reduced dependence on cash, higher seigniorage due to lower operating costs and settlement risks.”

The ministry noted that RBI had in October introduced amendments to the Reserve Bank of India Act, 1934, expanding the definition of “banknote” to include the digital form of currency.

Earlier in November, the RBI allowed the possibility of a pilot CBDC launch in the first quarter of fiscal 2022.

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