RBI working on digital currency launch, Bill on cryptocurrency in Parliament next week

New Delhi: As the Indian government is all set to introduce a bill in the winter session of Parliament for rules and guidelines on cryptocurrencies, the RBI is also gearing up for the launch of the digital currency.

NS Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, is listed for introduction in the Lok Sabha next week. The bill “attempts to create a facilitating framework for the creation of an official digital currency to be issued by the Reserve Bank of India. It also seeks to ban all private cryptocurrencies in India, however, it seeks to promote the underlying technology”. Allows certain exceptions for Cryptocurrency and its uses”.

Currently, there is no regulation or any restriction on the use of cryptocurrency in country.

It may be noted that on March 4, 2021, the Supreme Court set aside the RBI circular dated April 6, 2018, barring banks and entities regulated by it from providing services in respect of virtual currencies.

The Reserve Bank of India has repeatedly reiterated its strong views against cryptocurrencies, saying they pose a serious threat to the country’s macroeconomic and financial stability and the number of investors trading them and their claimed Doubt the market value as well.

The Reserve Bank of India is said to be working on a phased introduction of its own digital currency. A CBDC is legal tender issued by a central bank in a digital form. It is similar to fiat currency and is one-to-one exchangeable with fiat currency. Only its form is different.

A CBDC is similar to a currency issued by a central bank, but takes a different form than paper (or polymer). It is sovereign currency in an electronic form and will appear as a liability (currency in circulation) on the balance sheet of a central bank. The underlying technology, form and use of a CBDC can be tailored to specific needs. CBDC should be exchangeable equivalent to cash.

RBI Governor Shaktikanta Das also reiterated his view against allowing cryptocurrencies earlier this month, saying they pose a serious threat to any financial system as they are unregulated by central banks. RBI had announced its intention to come up with an official digital currency. Faced with the proliferation of cryptocurrencies such as bitcoin, central banks have many concerns.

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