Government Sets Up Panel To Look At Framework For Virtual Currencies

The government set up an inter-disciplinary committee to look at the framework of virtual or digital/crypto currencies, in order to keep a check on any financial risk they may pose.

The committee constituted by the Department of Economic Affairs of the finance ministry will take stock of the present status of virtual currencies, both in India and globally, and examine the existing global regulatory and legal structures governing these currencies, according to a government statement released on Wednesday.

It will also suggest measures to deal with such currencies, including issues relating to consumer protection, money laundering, etc., and examine any other matter related to virtual currencies which may be relevant. It has been tasked to submit its report within three months.

A crypto-currency is a digital currency created through encryption techniques, of which bitcoin is the most famous. Others include litecoin, peercoin, namecoin, ether and primecoin. In India, most companies use bitcoins.

“The circulation of virtual currencies... has been a cause of concern... 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...,” the government statement said.

The use of virtual currencies like bitcoins is not authorised by the RBI and could result in breach of anti-money laundering provisions, Minister of State for Finance, Arjun Ram Meghwal, said in a written reply in the Rajya Sabha on March 28.

The committee chaired by special secretary-economic affairs have representatives from Department of Economic Affairs, Department of Financial Services, Department of Revenue (CBDT), Ministry of Home Affairs, Ministry of Electronics and Information Technology, the Reserve Bank of India, NITI Aayog and State Bank of India.