Indian Finance Minister Nirmala Sitharaman. Photo: AFP

The Indian government has said that it has no proposal to recognize Bitcoin as a currency in the country. During the winter session of the Parliament, which began in New Delhi on Monday, Finance Minister Nirmala Sitharaman also informed the House that the government does not collect data on Bitcoin transactions.

The government had earlier announced that it plans to introduce the Cryptocurrency and Regulation of Official Digital Currency Bill 2021 during the ongoing session. The Bill seeks to ban all but a few private cryptocurrencies to promote underlying technologies while allowing an official digital currency by the Reserve Bank of India.

In a separate question on whether the government has any proposal to introduce central bank digital currency in the country, deputy finance minister Pankaj Chaudhary said that a proposal from the Reserve Bank of India was received in October 2021. Chaudhary said, “Reserve Bank has been examining use cases and working out a phased implementation strategy for the introduction of Central Bank Digital Currency with little or no disruption.”

He remarked that such a currency issued by the central bank has the potential to provide significant benefits, such as reduced dependency on cash. But he also cautioned that there are associated risks that need to be carefully evaluated against the potential benefits.

The cryptocurrency industry recently urged the government to take a nuanced approach towards regulating crypto assets in India. They expressed hope that the proposed bill will accommodate the aspirations of Indian crypto owners, Indian crypto entrepreneurs, and investors who have put their faith in India’s crypto growth story.

Cryptocurrency exchange CoinDCX’s spokesperson said a well-assessed and thought-through regulation will pave the way for greater adoption of the technology and will help millions of Indians embrace the new-age asset class.

However, India’s central bank Governor Shaktikanta Das has repeatedly flagged concern about cryptocurrencies and called it a threat to any financial system.

While cryptocurrencies are finding it difficult to get a favorable response from the government and the central bank and face an uncertain future, Singapore-based crypto futures and spot trading exchange Coinstore has entered the Indian market.

The company on Monday announced its entry into the Indian crypto market with the launch of its web and app platform for Indian users. Users can “trade, buy and sell cryptocurrencies, with easy KYC verification and 24/7 customer support,” Coinstore said in a statement.

The exchange enables trading into over 50 cryptocurrencies. The launch assumes significance as more than 20% of Coinstore’s active users come from India.

Cryptocurrencies allow people to buy goods and services and exchange money without involving banks, credit card issuers, or other third parties. Bitcoin was introduced in 2008 by an unidentified group of programmers as a cryptocurrency as well as an electronic payment system.