A high-level inter-ministerial committee has proposed a blanket ban on all digital currencies in India. The committee, however, proposed that the government legalizes a state-issued digital currency, setting the stage for India to join the global CBDC race.
Nirmala Sitharaman, the Minister for Finance in India, revealed the committee’s recommendations while responding to legislators’ questions in a parliamentary session. On whether the government intends to issue strict guidelines on digital currencies, he revealed that it’s leaning towards a total ban.
He stated, “A high-level Inter-Ministerial Committee (IMC) constituted under the Chairmanship of Secretary (Economic Affairs) to study the issues related to virtual currencies and propose specific actions to be taken in the matter recommended in its report that all private cryptocurrencies, except any virtual currencies issued by state, will be prohibited in India.”
Minister Nirmala revealed that the government was considering the committee’s recommendations. Once it makes its decision, it will reveal its stand to parliament for consequent legislative processes. He further reiterated that the Indian government doesn’t consider Bitcoin and other digital currencies as legal tender.
“It was announced in the Budget Speech for 2018-19 that the government does not consider cryptocurrencies legal tender or coins and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system.”
As with several other Indian government officials, the Minister pledged the government’s support for blockchain technology. He believes that blockchain could be the foundation of India’s future digital economy.
The Minister’s message echoes a bill the government recently proposed that seeks to pave the way for a digital rupee. As CoinGeek reported, the bill seeks to ban “private cryptocurrencies.” However, it doesn’t offer details on what a private digital currency is, with some pointing out that Bitcoin’s decentralized nature exempts it from being considered a private digital currency.
Elsewhere, a local report has revealed that the government has already put in motion steps to ban digital currencies. The report by BloombergQuint cited a senior official whose name it withheld. The official revealed that India is modeling its approach on China’s anti-digital currency stance.
However, the ban will be enforced gradually and in phases. This will give digital currency owners the opportunity to sell all their holdings, he told the business outlet.
For Indian digital currency entrepreneurs, all they can do is wait, Unocoin exchange founder Sathvik Vishwanath believes. He told the outlet, “We’re all waiting for details (of the proposed law) to come out to determine our next course of action. If government goes ahead with banning all cryptocurrencies, except the one backed by the state, it will not make sense to continue our business in India. But we’ll have to wait and watch.”
To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.
See also: CoinGeek Live panel, Digital Currency & Global Compliance: Tools & Tips for Exchanges, Wallets & Other Service Providers
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