While there are obvious concerns of money laundering and benami transactions, there are equal concerns with respect to company laws, payment systems and banking, securities and other commercial laws, and consumer protection
The decision of the government to introduce a bill that seeks to prohibit all private cryptocurrencies in India was not entirely unexpected. The issue of crypto currency (or virtual currencies/VCs) first came to the limelight when the matter went to the Supreme Court in 2018. In the course of lengthy arguments, the three-judge bench set aside the RBI circular that prevented crypto exchanges from dealing with the formal financial system on grounds of proportionality. However, the judgment recognised the role of the RBI in safeguarding the interest of financial stability. The moot point of the verdict was that there was nothing to show that VC adversely impacted RBI regulated entities and trading in such currencies was illegal.
The current bill now attempts to define the rules of the game so that the RBI, tax authorities, SEBI and other agencies have much better legal guidance in deciding the course of action with respect to VCs in their respective domains. The rules can, therefore, range from a ban to controlled interaction with the formal financial system.
