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cryptocurrency | IST

Official digital currency will kill cryptocurrency: Ex-finance secretary SC Garg

Mini

The union government says the proposed law on cryptocurrency aims to create a facilitative framework for the creation of an official digital currency by the reserve bank of India. Government also said the law aims to "prohibit all private cryptocurrencies." SC Garg, former finance secretary believes time for digital currencies has come and once that is official private cryptocurrency or private digital currencies automatically will go away.

India's cryptocurrency ecosystem is on tenterhooks after government proposes to prohibit private cryptocurrencies through legislation in the upcoming winter session of parliament. The details of the bill are still awaited and sources say the cabinet did not take it up at its meeting today (Nov 24).
The union government says the proposed law aims to create a facilitative framework for the creation of an official digital currency by the reserve bank of India. The government also said the law aims to "prohibit all private cryptocurrencies."
So how should India deal with cryptocurrencies to discuss this CNBC-TV18 spoke to former finance secretary SC Garg who led a panel that proposed a total ban on all cryptocurrencies.
According to Garg, the time for digital currency has come.
"We must introduce a digital currency that is the first aspect which this bill also talks about - that the government and the RBI will come up with a digital version of the currency. If that digital version of the currency comes in my judgement, the private cryptocurrency or private digital currencies automatically will go away,” he said.
Exemptions in cryptocurrencies
The former finance secretary said that the proposed bill, as it states,  will have some exemptions.
"Platform services, like seen in many clubs, malls, etc., can that be exempted so that the system works. The payments will also get made within that platform using that currency. But that would be a very difficult call to take. It is a complex system, something like this will have to be done. So I think we will have to carefully consider what is to be exempted and if we can figure that out well I think solving the problem for its use as currencies outside the system, or outside the platform would be far easier,” said Garg.
What the 2019 draft bill proposed
The bill sought to "prohibit mining, holding, selling, trade, issuance, disposal or use of cryptocurrency in the country. Under the bill, mining, holding, selling, issuing, transferring or use of cryptocurrency is punishable with a fine or imprisonment of up to 10 years or both.
It went on to add that a person must declare and dispose of any cryptocurrency in his possession within 90 days from the commencement of the act.
Garg explained that in 2019 the other aspects of cryptocurrencies like assets etc. were left unsaid.
"That was the weakness in that bill. Now since in the last two to three years, we have learned much more about the versatility and the utility of blockchain technology in creating lots of assets and other services. You can't simply say that cryptocurrency equals the entire cryptocurrency ecosystem that will have to be separated. Treating the entire thing as a currency will be a big tragedy, it will be a big loss for the nation and not only investors," he said.
For the full interview, watch the accompanying video