An understanding was visible that cryptocurrency can’t be stopped but it must be regulated in the meeting of the Parliamentary Standing Committee on Finance with industry associations and experts on the matter of crypto finance.
There was a consensus that a regulatory mechanism should be put in place to regulate cryptocurrency. Industry associations and stakeholders were not clear as to who should be the regulator, sources said.
Security of investors’ money was the most serious concern expressed by MPs at the meeting. An MP expressed concern over full-page crypto ads in national dailies. Experts said that cryptocurrencies are some sort of investors' democracy, according to sources.
"MPs (Members of Parliamentary Standing Committee on Finance) now want the government officials to appear before it and address their concerns," said sources on the meeting of the committee with industry associations and experts on the matter of crypto finance.
The parliamentary panel was chaired by BJP leader Jayant Sinha, discussed the pros and cons of crypto finance with various stakeholders, and several members were in favour of regulating crypto-currency exchanges rather than imposing an outright ban on crypto-currencies, according to sources.
The meeting took place against the backdrop of rising concerns in various quarters about crypto-currencies and the possible risks emanating from trading in them, especially since there is a growing interest in such assets worldwide.
No outright ban on cryptocurrencies in India at present
Currently, there are neither specific regulations nor an outright ban on use of crypto-currencies in the country.
Representatives of crypto exchanges, Block chain and Crypto Assets Council (BACC), industry bodies as well as academicians and other stakeholders submitted their views before the panel, whose meeting also happened days after Prime Minister Narendra Modi held discussions with senior officials from various ministries and RBI on the issue of crypto-currencies.
This is the first meeting on the subject that was convened by the Parliamentary Standing Committee on Finance. The panel is chaired by Sinha, who is also a former Minister of State for Finance.
The sources said that broadly the panel members wanted regulations for crypto currency exchanges and were not in favour of banning crypto currencies. Some Congress members in the panel told PTI that there are significant challenges in banning crypto currencies.
The broad view of the panel was that a Chinese wall should be put in place on crypto currencies' fungiblity in the real world and its interface with the real world should be regulated, they added.
Currency is a domain of the sovereign whereby its value is fixed in assured manner and crypto currency is a computer programme managed in distributed format on internet. Its value is only discovered by a buyer and user on an exchange which itself is illegal, they noted.
One of the members even wondered how crypto currencies are going to be regulated when even regulating the internet remains difficult. Members also expressed concerns about the possibility of crypto currencies being used for financing terror activities.
In the morning, panel Chairman Sinha said the meeting on crypto finance will discuss the opportunities and challenges this fast evolving industry presents to the regulators and policy makers.
"We have called stakeholders from across the industry, including operators of major exchanges, members of CII as well as academics from the Indian Institute of Management (IIM) Ahmedabad, who have done a very thorough study on the crypto finance," Sinha told PTI.
Further, he said the panel has called representatives from the India Internet and Mobile Association of India, of which Blockchain and Crypto Assets Council (BACC), a specific body that deals with crypto finance players.
"We will hear from them about their views on the right regulatory framework for this industry as it continues to develop and evolve," he said.
On March 4, 2020, the Supreme Court set aside an RBI circular of April 6, 2018, prohibiting banks and entities regulated by it from providing services in relation to virtual currencies.
On February 5, 2021, the central bank instituted an internal panel to suggest a model for the central bank's digital currency.
The RBI had announced its intent to come out with an official digital currency amid proliferation of crypto currencies about which the central bank has concerns.