In the upcoming winter session of Parliament, the government is bringing a bill regulating cryptocurrencies, 'The Cryptocurrency and Regulation of Official Digital Currency Bill-2021'. Earlier it was estimated, now this bill is present at number 10 in the list of 26 bills to be introduced in this session. That is, through this bill, the central government will ensure that investors keep a safe distance from cryptocurrencies. If they don't make it they will have to bear the risk themselves.
In the upcoming session of Parliament, it will definitely be clear about cryptocurrencies, what is the official opinion of the country on it? Well, as of now, the government wants the RBI to issue its own cryptocurrencies and all private cryptocurrencies present in India should be banned. However, there is also a possibility that the government may recognize some major cryptocurrencies with certain conditions for circulation. But nothing can be said with certainty about this right now, something will be clear in this regard only after extensive deliberations in the Parliament.
However, two years ago the government intended to ban cryptocurrencies. Its Expert Committee on Cryptocurrencies, headed by the former Finance Secretary, had called for a complete ban on it and it was also agreeable. Now the government believes that the recommendations of the committee headed by Subhash Garg have become obsolete. Of course this is his U-turn. All the countries of the world are now accepting that it is the global currency of the future and in view of its wide circulation going forward, it will be an ostrich attempt to ban it or to deny its effect. In this case, the Indian government's policy seems to be correct by assessing the global situation.
All the facts indicate that the future, path and direction of cryptocurrency and its investors in the country will be decided this year before next year. Before this, so much has been decided by the government stand that we can neither impose a complete ban on it like countries like China, Thailand nor can leave it open like countries like El Salvador. It would be better for us to regulate and control it by adopting a well thought out and practical policy. Although some financial institutions and economic experts do not completely agree with this move of the government, according to them a complete ban on cryptocurrencies is justified, but the government is going to take the middle way. This decision of the government is welcome according to the present circumstances and future assessment.
Time will decide the flow, spread, effect of this virtual currency, but the government will make embankments of rules on the rise of this currency rising like a flood, will try to decide the process of circulation and investment in this virtual currency. New policy to control cryptocurrencies is the need of the hour. This will not only be in favor of all types of small, big, retail investors, economy and financial environment of the country, but will also be effective on all serious challenges, issues, issues like national defence, security related terrorism, hawala trade, illegal money remittances. will cause a halt. Given the ever-increasing proliferation of cryptocurrencies, the government is also looking at taxing it. If this system is implemented, then if its investment, profit can be brought under the purview of income, direct and indirect taxes, then the government will also get huge revenue. If the government is undertaking this undertaking in this hope, then it will also be called a proper step.
The government will get the cryptocurrency bill passed from the cabinet, it is certain, sooner or later it will become a law, but the big question is, will the government's purpose be fulfilled just by making a law? It also has to be seen that how practical and safe this government decision is technically. Will this law enable the government to have the desired control over cryptocurrencies? Probably not, as it is not a simple financial matter related to ordinary banking or investment, but a very complex and sensitive technical issue related to digital encryption or encryption and blockchain technology. This will be controlled not by paper or statements, but through advanced and specialized technology. Are the technical preparations of the government complete in this regard? Has it made proper technical arrangements for effective regulation of cryptocurrencies before introducing this bill? Is it agreeable that the globally prevalent virtual currency can be transferred locally and directly?
Of course, this task is not going to be as easy as it seems. This will be the real challenge before the government. Banning cryptocurrencies is difficult to the extent of impossible, so controlling it is also not going to be easy at all. Even if you don't go into complicated technical details, its difficulty can be easily understood by the general public. Anyone from anywhere in the world can invest in cryptocurrencies either on their own or through exchanges operated by private entities. It is not controlled by the central authority of any country. There is no agency or mediation of any kind here, so who will control directly. To trade in the stock market, the investor has to introduce himself. There is no paperwork required in crypto, it is an open market. Even if partial regularization is possible, it is difficult to bring it within the legal framework. Because tracking this blockchain based global digital currency is extremely difficult. Even if the government has made rules to track cryptocurrencies, the central bank does not have the technical infrastructure available.
We are not as advanced as the US or Japan in terms of encryption technology. It will be difficult to stop the error and find solid evidence for it. There will be a need for people well versed in the technology of blockchain, to prevent the possibility of terrorism financing and illegal transactions, continuous monitoring of such crises can be done. It is necessary to study not only Estonia, Belarus and Switzerland, but also countries like Malta which have legalized cryptocurrencies before us. If cryptocurrencies are global, then the help of bodies like the WTO will also be needed. The government will have to rethink the process of property gain tax, GST, tax collection at source, income tax and other taxation. There is speculation that the government may levy a tax of more than 40 percent on the gains made from cryptocurrencies. For now, these are all things of the future. For now, what the government is doing in the way of creating a regulatory framework for these virtual assets on priority should be welcomed, as according to the Prime Minister, preparation is necessary against this digital threat. (ERC)