Delay in legislation on crypto boosts lobbying: The delay in the government finalizing the legislation on cryptocurrency has prompted intense lobbying, with agencies worried over the risks emanating from an unregulated segment with extreme price volatility, posing a threat to investors, many of whom do not understand the instrument.
Besides, there are concerns over the instrument being used for money laundering and terror funding, an issue that has been flagged by other agencies across the globe, sources told TOI.
While the Supreme Court had lifted the ban imposed by the RBI, the government had listed a bill on cryptocurrency to be introduced during the Budget session of Parliament but with the session cut short, the legislation could not make it.
During the monsoon session, the government remained silent on the future of the proposed bill with finance minister Nirmala Sitharaman recently saying that it has been sent for clearance by the Union Cabinet before it can be introduced in Parliament. The next session is at least two months away.
But crypto exchanges have used the interim period to launch a massive lobbying initiative with several governments and regulatory agencies, raising concerns. The exchanges have argued that a ban on digital currency transactions will result in job losses.
While there are fears that a ban will lead to investors getting locked into the instrument, sources indicated that a three-six-month window will be provided for investors to exit.
Several officials have junked the argument that crypto currencies are an asset class. Besides, there are worries over the legal basis for the presence of some of the exchanges, which remain outside the jurisdiction of either Sebi or the RBI. “There has to be global coordination to combat the challenge posed by cryptocurrencies. They are not a currency as only the sovereign can issue currency. There is a grave danger in allowing these instruments,” said a source.