An inter-ministerial committee of the Centre has recommended a ban on cryptocurrency in India as well as a penalty for activities involving virtual currencies. The Ministry of Finance said on Monday that the committee’s report and a draft bill will now be examined by the government.
These digital currencies are controlled by blockchain technology. Bitcoin, launched in 2009, is the best-known cryptocurrency. Cryptocurrency exchanges allow customers to trade digital currencies for other assets or different digital currencies. They are largely unregulated currently.
“Given the risks associated with them [private cryptocurrencies] 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 ministry said in a statement. “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,” the government added in a statement.
The committee was formed in November 2017, and comprises the secretary of Economic Affairs, the secretary of the Ministry of Electronics and Information Technology, the chairman of the Securities and Exchange Board of India and the deputy governor of the Reserve Bank of India.
Last week, while responding to questions in the Rajya Sabha, Minister of State for Finance and Corporate Affairs Anurag Thakur had said that the government had not yet prohibited cryptocurrency in India. “Presently, there is no separate law for dealing with issues relating to cryptocurrencies,” he had said, according to IANS. “Hence, all concerned departments and law enforcement agencies, such as RBI, Enforcement Directorate and Income Tax authorities, etc. take action as per the relevant existing laws.”
“Similarly, police/courts take action on IPC offences. Further, in view of the risks and dangers associated with cryptocurrencies, government and RBI have been issuing advisories, press releases and circulars to the public,” he added.
In his Budget speech in 2018, Union Finance Minister Arun Jaitley had said the Centre would crack down on the use of cryptocurrencies in the country. The virtual currencies were being used to sponsor illegal transactions, he had claimed. In December 2017, the government and the Reserve Bank of India had warned users against using virtual currencies. The government even compared them to ponzi schemes and warned traders of the risks, including “permanent loss of money”.