The embossed word Bitcoin sits on the edge of Bitcoins stacked (Photographer: Chris Ratcliffe/Bloomberg)

RBI Explores Possibility Of Government-Backed Cryptocurrency

The central bank is studying the feasibility of a government-backed digital currency even as peer-to-peer virtual currencies like bitcoin remain unregulated in the country.

An internal group is exploring the possibility of a fiat cryptocurrency that can be issued by the central bank, said Sudarshan Sen, executive director at the Reserve Bank of India. The banking regulator is not comfortable with non-fiat cryptocurrencies like bitcoin, he said

Bitcoin is the most popular digital currency. Others include litecoin, peercoin, namecoin, ether and primecoin. These are mostly used for peer-to-peer transfers and are accepted in a few countries as payments. Regulators globally are not comfortable with them.

The RBI has been wary of cryptocurrencies with senior officials often saying that it is prone to misuse. The banking regulator told a parliamentary panel that they are “susceptible to misuse” by terrorists and fraudsters alike for laundering money, newswire PTI reported on September 4.

In a notification on its website in February, the RBI had said that it has not authorised or licensed any company to operate in cryptocurrency. “As such, any user, holder, investor, trader, etc. dealing with virtual currencies will be doing so at their own risk,” the regulator had said.