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Crypto Bill 2021: 5 key questions about crypto ads, scams, taxes, more answered by Nirmala Sitharaman

As the Indian crypto market awaits the introduction of the Cryptocurrency and Official Digital Currency Bill 2021, in Parliament’s Winter Session, Finance Minister Nirmala Sitharaman during the Question Hour in Rajya Sabha on Tuesday noted that the bill is awaiting clearance from the cabinet. Here’s a quick recap of everything the finance minister said around cryptocurrencies in Parliament:

Ques – What are government plans on shutting down crypto advertisements?

Nirmala Sitharaman – There is no solution currently to close crypto ads but certainly to caution people around the risk involved, government is taking steps via SEBI and RBI. While they could do more (in raising awareness) but we are now at a point that the bill will soon come.

The question of shutting crypto ads was raised by senior BJP leader and Rajya Sabha MP Sushil Kumar Modi. The MP later added “during the recent cricket world cup, over Rs 50 crore was spent by crypto exchanges in ads that ran without any disclaimer. These ads are misleading and can lead to heavy losses.”

Modi also highlighted that the Crypto Bill was listed during the Budget Session as well but couldn’t be introduced.

Nirmala Sitharaman – Last time the bill was proposed but subsequently because there were other dimensions, which in real-time, we thought were important to bring into the bill. That bill has been reworked and is now coming as a new bill. So, the intent was either we improve that bill or come with a bill that is far more recent. Once the Cabinet clears the bill, it will come into the house. About misleading ads and banning ads, Guidelines of Advertising Standards Council of India are being studied and regulations that they have are all being looked into so that, if necessary, we can take some kind of decision to say how we are going to handle this.

Ques – What government is planning to do about the risk of money laundering and scams with the growth in crypto transactions?

Nirmala Sitharaman — The risk that this can lead to some kind of illegal transfers to not so desirable activities are matters which are being well monitored in the regular course also by institutions, by enforcement authorities etc. These are matters which are discussed at various levels.

Ques – Would there be a separate legal framework for non-fungible tokens (NFTs)? Also, how many people have paid income tax on crypto income and how much tax has been collected?

Nirmala Sitharaman — I don’t have the ready information on how much tax has been collected on crypto or how much has been paid on it. On having a separate framework for NFTs, at this moment I may not be able to say that there will be a separate framework or not, but certainly, all these matters are being discussed.

Ques – What government is doing to make people aware of risks associated with crypto investments?

Nirmala Sitharaman – Until the bill comes, there have been statements issued through the government, SEBI, and RBI (on the risks involved), and also fair awareness-building attempt has been made to say that this is a risky area and people should be conscious of what they are doing. Awareness or ‘alert’ has been issued so that people are fairly cautioned. That much has been done.

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Singapore crypto exchange Coinstore enters India amid govt seeking to ban private cryptocurrencies

Even as the government seeks to ban all private cryptocurrencies through the new crypto bill, which is likely to be introduced in the Winter Session that began Monday, Singapore-based crypto futures and spot trading exchange Coinstore has forayed into 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 per cent of Coinstore’s active users come from India.

“With over 20 per cent of our active users from India, we decided to start local operations to fully support our Indian users,” said Jennifer Lu, Head Product and Co-Founder, Coinstore. The setting up of a local support office is currently underway in the country. The company will have offices in Delhi, Mumbai, and Bengaluru “that will act as its base in India for future expansion.”

Coinstore is also looking to hire local talent with 100 immediate openings in India for its customer support, marketing and operations division. The company added that its $120-million fund, which is allocated for India expansion, will be deployed towards marketing, hiring, and development of crypto-related products and services for the Indian market.

Users will be provided with a copy trading feature to follow trades of other successful traders in order to make strategic investment decisions from trading the future prices of cryptocurrencies. In June this year, Coinstore had launched its iOS and Android apps globally alongside their web trading platform. The company said it would soon undergo a “rigorous audit by Hacken, a global cybersecurity firm with a focus on blockchain security.”

Coinstore’s foray follows the entry of Malaysia-headquartered crypto exchange CGCX.io back in April this year, as per a company release, followed by the US-based crypto trading platform CrossTower that entered India in September this year. According to a Nasscom report published in September this year, cryptotech has the potential to create more than 8 lakh jobs by 2030 in India, up from 50,000 individuals employed currently. Moreover, the industry is expected to reach $241 million in size by 2030 in India from $6.6 billion invested by Indian retail investors in different crypto assets such as Bitcoin, Ethereum, Polygon, etc., the report noted. The crypto industry has grown by 39 per cent in the last five years in India.

Importantly, the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 listed for introduction in the current Winter Session seek to create a framework for the creation of the official digital currency to be issued by the Reserve Bank of India. While it also intends to prohibit all private cryptocurrencies in India, however, it will allow for ‘certain exceptions’ to promote the underlying technology of cryptocurrency and its uses, the government had said in the legislative agenda released last week.

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Bank of Baroda raises Rs 1,997 cr via Basel III-compliant bonds

State-owned Bank of Baroda on Friday said it has raised Rs 1,997 crore by issuing Basel III-compliant bonds. The bank had come out with a Rs 2,000 crore issue of additional tier-I bonds on November 24.

“The bank has received total bid amount of Rs 5,308 crore, out of which the issuance was finalised for Rs 1,997 crore at 7.95 per cent (per annum),” BoB said in a regulatory filing.

The bank said it issued a total of 1,997 bonds of Rs 1 crore each under this issue to a total of 21 allottees. To comply with Basel-III Capital Regulations, banks need to improve and strengthen their capital planning processes.

These norms are being implemented to mitigate concerns on potential stresses on asset quality and consequential impact on performance and profitability of banks. Stock of Bank of Baroda traded 3.33 per cent lower at Rs 89.90 apiece on BSE.

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Exchanges decide to implement T+1 settlement cycle in phased manner

Stock exchanges and other market infrastructure institutions on Monday came out with a roadmap for the implementation of T+1 (trade plus one day) settlement cycle whereby the mechanism will be introduced in a phased manner from February 25.

T+1 means that market trade-related settlements will need to be cleared within one day of the actual transactions taking place. Currently, trades on the Indian stock exchanges are settled in two working days after the transaction is done (T+2).

The settlement cycle will be implemented in a phased manner and will apply only to the bottom 100 companies starting February 25, and from March 2022 onwards, the next bottom 500 stocks will be available for introduction to T+1 settlement, according to a joint statement.

The decision has been taken by market Infrastructure Institutions or MIIs — stock exchanges, clearing corporations and depositories. This comes after markets regulator Sebi in September permitted stock exchanges to introduce T+1 settlement cycle from January 1, 2022 on any of the securities available in the equity segment. As per the statement, all listed stocks, across stock exchanges (BSE, NSE and MSEI), will be ranked in descending order based on daily market capitalization averaged for month of October 2021. Where a stock is listed on multiple exchanges, the market capitalization will be calculated based on the price of stock at the stock exchange with highest trading volume during the period under review.

The list of stocks and exchanges where they are available for trading will be published on website of all exchanges. Based on the ranking arrived, the bottom 100 stocks will be available for introduction of T+1 settlement, from February 25, 2022. Thereafter, from March 2022 onwards, on the last Friday (trade day) of every month, the next bottom 500 stocks from the list of stocks ranked will be available for introduction to T+1 settlement. In case Friday is a trading holiday, the same will be introduced on immediate next trading day.

Any new stock getting listed after October 2021, will be added to list, based on the market capitalization calculated on the basis of average trading price of 30 days after commencement of trading. In case, based on market capitalization, if the stock falls under the category (in terms of market capitalization) of stocks already under T+1 settlement then that stock also becomes eligible for T+1 settlement and will be introduced in T+1 settlement cycle on the last Friday (trade day) of next month.

This will also apply to new stock getting listed on account of initial public offering (IPO), corporate action or any other reason and the date of transition will be announced jointly by all exchanges on which the stock is available for trading.

Securities such as preference shares, warrants, right entitlements, partly paid shares and securities issued under differential voting rights (DVR) will be transitioned to T+1 settlement along with the stock of parent company.

Further, more than 5,000 securities listed by the exchanges in the equity segment of bourses will be transitioned to T+1 settlement cycle along with the last scheduled batch of securities as determined by the exchanges.

Any security getting listed post the trade date of last scheduled batch of securities based on the ranking arrived will be directly introduced with T+1 settlement cycle.

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