Prime Minister Narendra Modi on Friday said that emerging technologies such as cryptocurrencies should be used to empower democracies, and not undermine it.
According to reports, PM Modi will take the final decision on the regulatory framework for cryptocurrencies, amid conflicting views, as policymakers remain adamant that unregulated transactions in digital currencies could hurt macroeconomic and financial stability.
“We must ... jointly shape global norms for emerging technologies like social media and cryptocurrencies so that they are used to empower democracy, not to undermine it," PM Modi said in a virtual summit hosted by US President Joe Biden.
This is for the second time in the last three weeks that Modi called for working together on the need to regulate cryptocurrency. In his virtual address at the Sydney Dialogue on November 18,, he urged democratic nations to work together to ensure that cryptocurrency does not end up in wrong hands.
After initially planning to ban all private cryptocurrencies, the government announced that it will establish a regulatory framework, as part of the new crypto bill which will be introduced in the winter session of the Parliament.
However, crypto will not be recognised as currency or legal tender in India. The legislation's name has replaced the word "cryptocurrency" with "cryptoasset". The bill also seeks to minimise the financial stability risk by suitably ring-fencing the formal financial sector from crypto assets.
The bill proposes the establishment of a facilitative framework for "distributed ledger technology" and lays the groundwork for the creation of the official digital currency (digital rupee) to be issued by the Reserve Bank of India (RBI), which is to be regulated by the RBI Act.
As a deterrent for those found using these assets for terror related activities, the provisions of the Prevention of Money Laundering Act (PMLA) will apply with suitable amendments.
Individuals and corporations violating government rules on crypto finance will face fines of up to Rs 20 crore and a jail term of 1.5 years, according to the proposed legislation to regulate cryptocurrency in India.
The crypto bill empowers the government to exempt certain activities in public interest such as crypto mining, generating holding, selling dealing in issue transfer dispose of or uniting it as a medium of exchange, store of value and a unit of account.
Cryptoassets will be dealt with the existing crypto exchange platforms which will be regulated by the Securities and Exchange Board of India (SEBI). A cut-off date will be prescribed for those having cryptoassets to declare and bring under the crypto exchange platforms - which will be regulated by SEBI.
Earlier, Finance Minister Nirmala Sitharaman said the new bill takes into account the rapidly changing dimensions in virtual currency space, and incorporates features of the earlier bill that could not be taken up.