Cryptos won’t become legal tender, says govt; but has the Indian crypto industry asked for it?

Cryptos won’t become legal tender, says govt; but has the Indian crypto industry asked for it?
Photo Credit: Pixabay
26 Nov, 2021

Even as the fate of cryptocurrencies continues to hang in balance between prohibition and regulation, at least till listing of the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, in Parliament this winter session on 29 November, Union Finance Secretary T V Somanathan told a TV channel on Friday asserted that cryptocurrencies are not going to become a legal tender. 

"The Indian Rupee is a legal tender, while gold and silver are not legal tenders. The rest will be decided in the Bill," Somanathan told CNBC TV18 in an interview on Friday. 

But is making cryptocurrencies legal tender, one of the demands of the crypto industry?  

It does not appear so. It was only on Thursday that the Blockchain and Crypto Assets Council (BACC), a part of the Internet and Mobile Association of India (IAMAI), clarified that the industry body has always been against the usage of private cryptos as a currency in India as that would interfere with monetary policy and fiscal controls.   

BAAC added that they advocate the use of cryptos only as an asset. "The Council believes that a smartly-regulated crypto asset's business will protect investors, help monitor Indian buyers and sellers, lead to better taxation of the industry, and limit illegal usage of cryptos," it said. 

The government is clearly not happy with the lack of a regulatory framework for cryptos and the misleading TV commercials that are encouraging people to invest in cryptos even as the rattle of the associated disclaimers at a speed that defeats the very purpose of alerting people against potential risks. 

While the Reserve Bank of India (RBI) has consistently cautioned against investing in cryptocurrencies without due diligence, Prime Minister Narendra Modi recently even urged "democratic nations" to come together to regulate cryptos and prevent their misuse. 

However, on November 13 meeting chaired by Prime Minister Narendra Modi on cryptos, it was decided that the government will proactively engage with stakeholders of the crypto industry.  

Despite the lack of regulations, India is home to the world's largest crypto community. According to Broker Chooser, a broker discovery platform, India has 10.07 crore crypto owners, which is the highest in the world. 

For the record, the enactment of the Bill in Parliament this winter session will facilitate the issuance of an official digital currency by the RBI. According to the listing notice, the Bill also “seeks to prohibit all private cryptocurrencies in India" even as “it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses". 

The crypto industry, meanwhile, is waiting with bated breath for its enactment to understand their fate.