Cryptocurrency won’t be legal tender by any means, says finance secretary TV Somanathan

Somanathan’s remarks come amid the backdrop of the Centre’s decision to bring a bill in the Winter Session of Parliament to regulate cryptocurrency and a crash in prices of some popular cryptocurrencies

Cryptocurrency won't be legal tender by any means, says finance secretary TV Somanathan

Cryptocurrency trading in India occupies a grey area until legislation covering it comes into effect. Image: Michael Wuensch from Pixabay.

Finance secretary TV Somanathan on Thursday said cryptocurrency won’t be a legal tender by any means and that the issue is “off the table”, as per CNBC-TV18.

Somanathan’s remarks come in the backdrop of the Centre’s decision to bring a bill in the Winter Session of Parliament to regulate cryptocurrency and a crash in prices of some popular cryptocurrencies.

Speaking to CNBC -TV18, Somanathan said some people are overreacting to the development of the crypto bill being scheduled for listing in Parliament. “However, one thing I can say very clearly is that crypto will not be legal tender by any means. Gold is not a legal tender, silver is not a legal tender and alcohol is also not a legal tender, beyond that I will not be in a position to say anything more,” he said.

The drafting of the crypto bill is going on right now, he added, as per the report.

The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, is among 26 bills listed for introduction in the Winter Session, beginning on 29 November, according to the Lok Sabha website.

The bill seeks to “prohibit all private cryptocurrencies in India” but allows for “certain exceptions to promote the underlying technology and its uses”. It also aims to “create a facilitative framework” for the creation of the official digital currency to be issued by the RBI.

“A regulation mechanism will be in place so that crypto is not misused. The government is concerned about the underground transactions happening against cryptocurrency — particularly its role in ‘hawala’ and terror funding,” they said.

They added that cryptocurrency will not be recognised as legal tender as this is dangerous for the currency and taxation system of the country. “A strict mechanism will be in place so that law enforcement agencies can trace the origin of cryptocurrency used for illegal or anti-national work,” they said.

On Wednesday, all major digital currencies saw a fall of around 15 percent and more, with Bitcoin down by around 18.53 percent, Ethereum fell by 15.58 percent, and Tether down by 18.29 percent. According to data sourced from CoinDesk, a New York-based news site specialising in cryptocurrencies, Bitcoin’s value depreciated to $55,460.96 on Tuesday evening, an additional 20 percent slump from the all-time high of nearly $69,000 that it reached earlier on in November.

India has been taking a keen note on cryptocurrencies, thanks to its robust growth in the country amid a lack of regulations, but the government has been eager to bring in laws to regulate the digital currency sector.

Prime Minister Narendra Modi had last week said cryptocurrencies must not fall into the “wrong hands and spoil our youth”, urging all democratic nations to come together and ensure things like these do not happen. The government and the RBI had recently hinted about floating a strong regulatory control on cryptocurrency to avoid money laundering and terror financing, rather than banning it entirely.

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