Cryptocurrency Regulation and Legislation: A Comprehensive Overview
The Lok Sabha recently introduced the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, which aims to establish a favorable framework for the issuance of digital currency by the Reserve Bank of India (RBI). This bill is significant as it seeks to regulate the growing market of cryptocurrency in India, which has seen a surge in investment in recent years.
The Minister of State Finance, Shri Pankaj Chaudhary, highlighted the importance of international collaboration in regulating crypto assets, emphasizing the need for common standards and taxonomy. The Ministry of Finance is responsible for overseeing the policy-related ecosystem and crypto assets in India.
While the government had planned to introduce new cryptocurrency regulations during the Winter Session of Parliament, delays have pushed the bill’s introduction to a later date. The bill’s introduction is crucial as it will provide clarity on the regulation of virtual assets like cryptocurrencies, non-fungible tokens (NFTs), decentralized applications, and real estate tokens.
In the global context, the legal status of cryptocurrency varies from country to country. Countries like the United States, the European Union, and Canada have adopted a positive approach towards cryptocurrencies, while others like China, Bangladesh, and Egypt have banned them completely.
In India, the legality of cryptocurrencies remains ambiguous, with no specific regulations governing their use as a payment medium. The recent Union Budget 2022 introduced a 30% tax on gains from cryptocurrencies, signaling the government’s intent to regulate virtual assets.
Overall, the introduction of the Cryptocurrency Bill 2021 is a significant step towards regulating the cryptocurrency market in India. It aims to create a structured framework for the issuance of official digital currency by the RBI while prohibiting private cryptocurrencies. The bill, along with the taxation measures introduced in the Union Budget, marks a crucial milestone in the government’s efforts to regulate the cryptocurrency sector.
