The Government had constituted an Inter-Ministerial Committee on Virtual Currencies on 2.11.2017 under the Chairmanship of Secy (EA), with Secy (MeiTY), Chairman (SEBI) and Dy. Governor, RBI as Members. The Group’s report, along with a Draft Bill has been received by the Government. This Report and Draft Bill will now be examined in consultation with all the concerned Departments and Regulatory Authorities, before the Government takes a final decision.
In the Report, the Group has highlighted the positive aspect of distributed-ledger technology (DLT) and suggested various applications, especially in financial services, for use of DLT in India. The DLT-based systems can be used by banks and other financial firms for processes such as loan-issuance tracking, collateral management, fraud detection and claims management in insurance, and reconciliation systems in the securities market.
As for private cryptocurrencies, given the risks associated with them and volatility in their prices, the Group has recommended banning of the cryptocurrencies in India and imposing fines and penalties for carrying on of any activities connected with cryptocurrencies in India.
The Group has also proposed that the Government keeps an open mind on official digital currency.
As virtual currencies and its underlying technology are still evolving, the Group has proposed that the Government may establish a Standing Committee to revisit the issues addressed in the Report as and when required.
A copy of the Report of the Group, along with the Draft Bill ‘Banning of Cryptocurrency & Regulation of Official Digital Currency Bill, 2019’ has been placed on the website of the Department of Economic Affairs.
About Virtual Currencies :
Virtual currency, or virtual money, is a type of unregulated, digital money, which is issued and usually controlled by its developers and used and accepted among the members of a specific virtual community. The U.S. Commodity Futures Trading Commission has warned investors against pump and dump schemes that use virtual currencies.