Cryptocurrencies have seen a big boom and huge crashes. Some Indians have made millions, while others have lost their savings. Even though Indians are investing billions in crypto, the country still doesn't have clear laws on it. It may change soon though.
Economic affairs secretary Ajay Seth told reporters on Monday that the government is ready with its consultation paper on cryptocurrencies, reported Reuters.
'There needed to be a global consensus reached on cryptocurrencies, and India would look at regulations enforced in other countries before deciding how it would be regulated,' he said.
We take a look at the journey of cryptocurrencies in India, and how the government is planning to regulate it.
HISTORY OF CRYPTOCURRENCIES IN INDIA
- Cryptocurrencies started its journey in 2008 after a paper titled “Bitcoin: A Peer to Peer Electronic Cash System” was published. Two years later, the first sale of an item using Bitcoin took place with someone swapping 10,000 Bitcoins for two pizzas, reported moneycontrol.com. After this, other cryptocurrencies also started popping up.
- In 2013, the Reserve Bank of India (RBI) issued the first circular regarding cryptocurrencies. The RBI cautioned the users, holders and traders of Virtual Currencies (VCs), including Bitcoins, about the potential financial, operational, legal, customer protection and security related risks.
- A year after demonetisation, as the crypto market was growing rapidly in India, a warning clarifying that virtual currencies are not a legal tender was issued by the RBI and the finance ministry by the end of 2017.
- In 2018, RBI came out with a circular restraining banks and other payment systems from dealing with virtual currencies.
- On 1 November 2018, Nischal Shetty, Founder of WazirX, started the #IndiaWantsCrypto campaign for the positive regulation of crypto in India, reported moneycontrol.com.
- In March 2020, the Supreme Court struck down the crypto banking ban declaring the RBI circular unconstitutional.
- On January 29, 2021, the government announced that it will introduce a bill to create a sovereign digital currency and subsequently put a blanket ban on private cryptocurrencies. In November 2021 it was decided by the government that cryptocurrencies should not be banned but regulated.
- During the annual budget in 2022, Union Finance Minister Nirmala Sitharaman had said the government would tax gains made through cryptocurrency investments at 30 per cent. But India has still not given the measure legal status.
- On May 30, a government official said that the government is ready with its consultation paper on cryptocurrencies.
WHAT'S THE LATEST DEVELOPMENT?
Once the consultation paper is finalised and is accepted by the government, we will have a clear idea what will be the regulations regarding digital currencies in India.
'Our consultation paper is fairly ready and we went into a deep dive and have consulted not just the domestic institutional stakeholders but also the World Bank, and the International Monetary Fund. So we hope that we will soon be in a position to finalise our consultation paper,' government official Ajay Seth told reporters on the sidelines of an event on Monday.
'Cryptocurrency is an example of the kind of challenges we are facing as a global family with a changing global order. To fight this, every nation, every global agency needs to have collective and synchronised action,' he said.