A prominent Indian economist has opined that regulation is necessary for bitcoin to become a legal currency in the country.
Speaking to Indian business daily the Economic Times, Dr. S.P. Sharma – chief economist at the PHD Chamber of Commerce and Industry, questioned the likelihood of bitcoin becoming a mainstream legal currency in the absence of regulation and monitoring.
As a rapidly growing emerging economy, India is quickly embracing digital payments as a part of a cashless initiative led by the central government which notably began with last year’s unprecedented cash ban. There is a marked growth of the local bitcoin sector amid an overall uptick in awareness and adoption of the cryptocurrency in recent years, despite the lack of a ‘legal’ status in the country. Notably, however, bitcoin is not illegal either.
“It’s fair to say that currently the cryptocurrency is neither illegal nor legal in India,” stated Dr. Sharma.
Unless the cryptocurrency is properly and comprehensively regulated and monitored by a robust institution, I don’t see bitcoin becoming a legal currency in India.
As things stand, Indian authorities are working toward a regulatory and legal future for cryptocurrencies. Earlier this year, India’s Ministry of Finance established the formation of a ‘virtual currency committee’ tasked toward proposing a framework for bitcoin and other digital currencies. The committee sees representatives from a number of governmental ministries including the country’s taxation authority alongside those from the central bank.
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 speculative outcome is likely to see Indian authorities regulate the local bitcoin industry with little likelihood of a ban. regulation of the industry is also likely to coincide with taxation of bitcoin adopters in the general public.