The Indian government has established an interdisciplinary committee that includes among others, the central bank, to examine the framework surrounding virtual currencies like bitcoin.
India’s Ministry of Finance has today announced the formation of a committee that will examine the existing framework – of which there is notably none in India – of virtual currencies.
The following excerpt is the beginning of the announcement, citing ‘concern’ with the growing adoption of cryptocurrencies like bitcoin in India.
The circulation of Virtual Currencies which are also known as Digital/Crypto Currencies has been a cause of concern….Reserve Bank of India [the country’s central bank] 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 committee is established by the Ministry of Finance, the authority that oversees taxation & the country’s finances; and the Department of Economic Affairs, the nodal sub-department of the Ministry that prepares the country’s budget.
The committee will be chaired by the Special Secretary of Economic Affairs and representatives from a number of other ministries. Notably, the committee will also be represented by the central bank and the State Bank of India, the country’s largest bank that is also state-owned.
The Committee’s tasks are laid out as follows:
- Taking stock of the present status of Virtual Currencies both in India and globally;
- Examining the existing global regulatory and legal structures governing Virtual Currencies
- Suggest measures for dealing with such Virtual Currencies including issues relating to consumer protection, money laundering, etc; and
- Examine any other matter related to Virtual Currencies which may be relevant.
The lack of regulation by the government, at a time when other Asian nations including Philippines and Japan do so in acknowledgement of bitcoin as a legitimate method of payment, has led to India’s young but growing bitcoin industry to establish a self-regulatory body and watchdog earlier in February.
Contrary to recent reports of the Indian government deciding upon the legality of bitcoin in the country by April 20, the committee will have three months to submit a report based on its research into bitcoin and its regulation, usage, and acceptance around the world.
Indian authorities would do well to take a cue from their Russian counterparts, who went from proposing prison sentences for bitcoin adopters to reversing that stance and hinting toward bitcoin regulation, in the space of a year.
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