New Delhi: The Central Government is expected to come up with a detailed paper on cryptocurrency by September this year which would clarify the stand of Government and also include a better regulatory policy on digital currency.
According to a source of the Finance Ministry, the government has finally decided to come up with detailed guidelines on virtual currency. The source informed that the draft is ready and all the stakeholders which include SEBI (Securities and Exchange Board of India), RBI (Reserve Bank of India) and IAMAI (Internet and Mobile Association of India) are being consulted before bringing out the final paper. It is expected that the final paper will be ready by September.
Interdisciplinary Committee to Examine Regulatory Framework
To scrutinize the regulatory framework on cryptocurrency, the Ministry has formed an interdisciplinary committee which will be headed by the Special Secretary (Economic Affairs). Some reservations have also been expressed by SEBI and RBI with regards to the clauses in the initial draft.
Notably, digital currency is new to the world and almost governments of all the countries are finding it difficult to deal with it. The source said that there are many officials who are sceptical about it and their hesitation is agreeable. Although, he said that despite reservations and hesitations we have to come to a common conclusion. An appropriate mechanism to regulate the digital currency has to be made.
IAMAI Challenged RBI’s Decision
The process of making the guidelines on cryptocurrency started due to the challenge of IAMAI to the orders of RBI in the Supreme Court. Earlier this month, the IAMAI urged the apex court to give a stay on the circular of RBI which asked to stop the trading of cryptocurrencies. Though the court refused to put a stay on the RBI circular, it instructed the central bank to submit responses within three weeks.
The Supreme Court has now listed the matter for final disposal on September 11. The central bank informed the court that if the crypto trading is allowed then it will encourage illegal transactions. Advocate Shyam Divan representing RBI in the court stated that the policy of RBI is of ‘extreme caution’.
The government is still waiting for the detailed responses from the market regulator SEBI and central bank RBI. As soon as they submit the responses, they will be included in the draft. The statement released by RBI on April 5 read, “The virtual currencies raise concerns of consumer protection, market integrity and money laundering, among others.”
It further stated, “In view of the associated risks, it has been decided that, with immediate effect, entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling VCs.”