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Indian State of Karnataka Considers Digital Currency Policy

Last Updated March 4, 2021 4:58 PM
Rebecca Campbell
Last Updated March 4, 2021 4:58 PM

The Indian state of Karnataka is in the process of putting together a policy that focuses on digital currencies such as bitcoin.

Located adjacent to the Arabian Sea, Karnataka capital is Bengaluru, formerly Bangalore and is known as a high-tech hub. Due to a rising demand in the popular digital currency, bitcoin, the state is keen to maintain pace with the increase in investors who are turning to the currency. In particular, the digital currency is attracting a young audience.

In a report from The Times of India , Priyank Kharge, IT & BT minister, said:

Government will soon host a seminar to understand blockchains for governance & bitcoin. If necessary, we will evolve a policy.

At present, bitcoin is neither legal nor illegal in India; however, a recent report published in July claims that the digital currency is unlikely to be declared illegal, but the digital currency’s regulatory fate remains uncertain.

Last month, India’s finance minister Arun Jaitley held meetings to examine the risks linked with digital currencies such as bitcoin. In the past, Jaitley has pushed a digital agenda in the country by stating that banks should promote digital banking. This was particularly pertinent after the country’s demonetization last November when India’s prime minister, Narendra Modi, removed 86 percent of the nation’s currency when he banned two of the country’s biggest banknotes, the Rs 500 and Rs 1,000.

Bengaluru-based bitcoin exchange Unocoin is considered India’s leading digital currency exchange. Founded in 2013, it has over 150,000 customers and more than $350 million in total revenue, according to its website.

However, in June, the exchange was forced to halt withdrawals and block access to customers’ accounts after discovering a security flaw on its server. As reported by CCN.com, the flaw was quickly discovered with the necessary precautions taken to solve it.

Yet, while many may link the digital currency with that of ransomware attacks – Indian firms have refused to pay bitcoin ransoms – advocates of bitcoin say that it is a much better option to perform faster transactions.

An industry source said:

This debate over whether bitcoin can be used for legitimate transactions seems to have spurred the Karnataka government to take the lead over trying to build a consensus over the cryptocurrency and formulate a policy for it.

Featured image from Shutterstock.