With the advent of digital payments in India, the government is now turning to virtual (or crypto) currencies. The country’s Ministry of Finance has today announced the formation of a high-level inter-disciplinary committee to examine the existing framework of the said currency/payment alternatives.
This development, in no way, means the government is planning to accept and legalize crypto currencies in the country. Instead, the official press statement reads that the government is extremely concerned with the circulation of “Virtual Currencies, which are also known as Digital/Crypto Currencies.” Thus, it is forming a committee to understand the present state of crypto currency in India as well as across the globe.
The committee will not only be studying the circulation and current state of crypto currency in the nation. It also intends to study the legal and regulatory structures governing the flow of Bitcoins (a form of crypto currency) in foreign nations, where they are accepted openly. It will then suggest measures on how to deal with such crypto or virtual currencies, including everything from the circulation to security and money laundering among other things. Any other topic relevant to the subject matter will also be examined.
This inter-disciplinary committee will be chaired by Special Secretary (Economic Affairs). The rest of the committee, on the other hand, will include top officials from the Department of economic affairs, financial services, revenue (CBDT), the Ministry of Home Affairs, Ministry of Electronics and Information Technology (MeitY), Reserve Bank of India, NITI Aayog and even the largest public bank — State Bank of India. It has been instructed to submit a report of their findings within three months.
While the demonetization drive is now over, India is still taking baby steps to open up to the concept of digital payments. Though it is a difficult mindset to change for a populace bogged down by hard cash transactions but we’re currently in the transition process. The advent of digital payment startups in the last couple years, followed by initiatives such as BHIM, Aadhaar Pay, and Bharat QR are also helping improve the scenario. We, however, are still miles away from accepting Bitcoin, other crypto currencies, as a legal and secure method of payment. The press release says,
Reserve Bank of India had also cautioned the users, holders, and traders of Virtual currencies (VCs), including Bitcoins, about the potential financial, operational, legal, customer protection and security related risks that they are exposing themselves to.
Even the U.S is finding it a little difficult to bring Bitcoins to the frontlines. The government had recently denied the plan to trade the Winklevoss twins’ Bitcoin Trust ETF on the stock exchange. Their proposal was rejected because of the unregulated nature of Bitcoin market, which the government said posed an immediate threat to its trading. The said nature of the crypto currency, it says, makes it too difficult to monitor, thus making it highly susceptible to fraudulent activity.
Still, the popularity, as well as the user base of Bitcoin (and other crypto currency systems) is steadily increasing in the nation. Many startups, such as UnoCoin, CoinSecure, and ZebPay among others, have popped up and are offering customers the option to trade in Bitcoins while being within the banking system. There are currently an estimated of over 50k enthusiasts, who are ready to trade one Bitcoin at over ₹81,000 — the current price of the crypto currency.