New Delhi: An Inter-Ministerial Committee (IMC) has recommended banning of cryptocurrencies in India and imposing fines and penalties for carrying any activities connected with cryptocurrencies in the country.
The Inter-Ministerial Committee was constituted in November 2017 under the chairmanship of Secy (EA), with Secy (MeiTY), Chairman (SEBI) and deputy Governor, RBI as members, to study the issues related to virtual currencies and propose specific action to be taken in this matter.
Government said that the 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.
It may be noted that the Reserve Bank of India has put banking restrictions on trading in cryptocurrencies.
A cryptocurrency is a digital or virtual currency that uses cryptography for security and is generally based on Blockchain technology, a distributed ledger enforced by a disparate network of computers. Bitcoin is the most popular cryptocurrency in the world.