India has long been cynical about cryptocurrencies and this cynicism was further evidenced by their hard-line stance over the last few years. But this could all be set to change.
Indias local news outlet DNA India reported that a committee has been set up by the Finance Ministry that will be overseen by the Department of Economic Affairs. This committee was created to consider whether certain crypto tokens and assets should be allowed to be used within the country. Once all considerations have been made, draft proposals will be finalised and the legislation will be tabled in Parliament.
Subhas Chandra Garb, head of the Department of Economic Affairs said:
“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 uses and how it can be mainstreamed in India.”
Whilst stating that blockchain and DLT have a lot of promise, Garg was quick to deny that there was any chance of cryptocurrencies being used in any manner in the future. She reiterated that the DEA has issued multiple advisories to the public that categorically warn against the use of cryptocurrency, as well as comparing them to “Ponzi kind of scheme”.
The Reserve Bank of India has issued a bank on all banks handling any type of business with cryptocurrency- related businesses or individuals- a large blow to the countries burgeoning sector.
Garg did go on to say that she believes the government could be interested in “testing out the waters” when it comes to crypto tokenisation which would not be able to substitute for currency in any way.
“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 a regulatory point of view. But in the case of cryptocurrency, one needs to allow it as a legal tender first.”
The committee is said to analyse prospects and possible consequences of the government lifting legal sanctions on cryptocurrencies.
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