A committee set up by the finance ministry, under the chairmanship of the Department of Economic Affairs (DEA) secretary, is reportedly working on a set of regulations and roadmap to allow certain crypto assets to be used in India. Once the draft proposals are finalized, the legislation will be tabled before the Parliament, according to DNA’s source.
DEA secretary Subhash Chandra Garg, who is heading the committee, is quoted by DNA as saying:
“The committee is studying the possibility of using cryptocurrencies or crypto technology (distributed ledger technology) for financial transactions and also what kind of regulations are needed for that…[while] the currency is totally banned, the committee is discussing its other usage and how it can be mainstreamed in India.”
While emphasizing that DLT technology — of which blockchain is one type — offers “a lot of promise,” Garg reportedly “categorically denied” the future use of cryptocurrencies themselves “in any manner,” including in payment systems.
Garg said that the DEA has issued “several advisories” to the public warning people of the risks of cryptocurrencies, which are considered to be “a Ponzi kind of scheme” and not “currencies at all.” Meanwhile, the Reserve Bank of India (RBI) has issued a ban on banks’ dealings with crypto-related businesses and persons, which came into effect July 5.
Garg said, however, that he believes the government may “test the waters” when it comes to allowing for crypto tokenization, which — if introduced — would not be able to serve as a substitute for fiat currencies:
“One will need to pay physical money to buy a token which could be stored as a code in any basic mobile feature phone. It can even be used for remittances. So, it is easy to implement from technology as well as regulatory point of view. But in case of cryptocurrency, one needs to allow it as a legal tender first.”
As part of its efforts, the committee will reportedly include an analysis of what it considers would be the prospects and consequences of the government legalizing cryptocurrencies.
Ongoing hearings on RBI’s controversial ban have seen the judiciary refuse to grant interim relief to those that purport to be affected. Recently, the court deferred the final hearing on the ban, originally scheduled for July 20, until September 2018.