Inter-Ministerial Committee on Virtual Currencies submits Report

Inter-Ministerial Committee on Virtual Currencies headed by finance secretary Subhash Chandra Garg has submitted its report to the government. The committee set up by Centre has also proposed a draft bill ‘Banning of Cryptocurrency & Regulation of Official Digital Currency Bill, 2019’.

Background

Government had constituted an Inter-Ministerial Committee (IMC) on 2 November 2017 under the Chairmanship of Subhash Chandra Garg, Secretary of Department of Economic Affairs for studying issues related to virtual currencies and to propose specific action to be taken in this matter. Members of committee included secretary (MeiTY), Chairman of Securities and Exchange Board of India (SEBI) and Deputy Governor of Reserve Bank of India (RBI).

Key Highlights of Report

DLT Technology: Report submitted by group highlights positive aspect of distributed-ledger technology (DLT). It suggested various applications for use of DLT in India, especially in financial services. DLT-based systems for instance can be used by banks or other financial firms for processes like tracking of loan-issuance, fraud detection, claims management in insurance, collateral management as well as reconciliation systems in securities market.

Private Cryptocurrencies: Given the risks associated with private cryptocurrencies and volatility in their prices, the committee recommended banning of cryptocurrencies in India by enacting a law and imposing fines and penalties for carrying on activities related to such cryptocurrencies in India.

Key Proposals:  As virtual currencies and its underlying technology are still evolving the Group has proposed that-

Government should keep an open mind on official digital currency.

Government may establish a Standing Committee to revisit issues addressed in Report as and when required.

Way Ahead

Report and Draft Bill submitted by Committee will now be examined in consultation with all concerned Departments and Regulatory Authorities, before Central Government takes a final decision. For now draft bill has been placed in the public domain on website of Department of Economic Affairs.

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