Consultation paper on cryptocurrency ready: Ajay Seth

Economic affairs secretary Ajay Seth on Monday said that the consultation paper on cryptocurrencies is complete and it will soon be submitted by the government.

Department of Economic Affairs (DEA) secretary Ajay Seth says this on the sidelines of a finance ministry press conference, "Our consultation paper is fairly ready. We have gone into a deep dive in this. We have consulted not just the domestic institutional stakeholders but also the World Bank (WB) and International Monetary Fund (IMF). We will soon be in a position to finalise our consultation paper."

Seth also pointed out that the government is beginning work on some global regulations on cryptocurrencies. "The countries that chose to prohibit crypto can't succeed unless there is a global consensus around that. If there is a global consensus around the regulations, then there has to be a broad framework of participation of countries," he added stressing on the need for a broader framework on which all the economies have to be together.

"This point has been made time and again. PM has made this point time and again. Other nations too are talking about the same thing. IMF and the US Treasury also are of the view that we need a global paradigm on with regard to digital assets," Seth said.

The government last year listed a bill to prohibit private cryptocurrencies. The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, however, has not been tabled yet in the Parliament. The bill aimed to ban all cryptocurrencies as a payment method in the country. It, however, allowed some private coins to promote underlying technologies, while also allowing the Reserve Bank of India to launch an official digital currency.

It may be noted that the RBI has expressed its reservations on cryptocurrencies as a payment mechanism owing to concerns on economic and financial stability. The government, however, is of the view that the underlying technology like blockchain may need to be promoted.

"Cryptos are not currencies and that they are not a digital legal tender either. They are speculative assets. The Central Bank Digital Currency (CBDC) announced in the Budget is, of course, the digital legal tender. The regulatory framework is crucial to roll out digital currency/assets, and India has not yet announced any 'radical' framework on this. A gradual approach will be taken, and that's why the delay," finance minister Nirmala Sitharaman had said on the crypto bill in her post budget press conference on Feb 1.