India’s Inter-Ministerial Committee recommends ban on private cryptocurrencies

  • 22 July 2019, Monday, 10:10

While most countries have remained uncertain about cryptocurrencies and crypto-adoption, India perhaps leads the race in terms of keeping its citizens in the gray. With Right to Information (RTI) requests going vaguely answered and strange rumours about a ban floating around, India’s Ministry of Finance has now openly addressed the ongoing crypto-confusion. Through a recent press release, the Ministry informed the community,

“The Government had constituted an Inter-Ministerial Committee (IMC) on 2.11.2017, to study the issues related to virtual currencies and propose specific action to be taken in this matter.”

In addition to IMC’s report, the Indian government admitted to receiving a Draft Bill (named ‘Banning of Cryptocurrency & Regulation of Official Digital Currency Bill, 2019’), both of which will be examined before the Government takes a final decision.

The press release also focused on the positive aspects that were highlighted by the IMC, and included distributed ledger technology (DLT)-focused applications, especially in financial services. The report said,

“The DLT-based systems can be used by banks and other financial firms for processes such as loan-issuance tracking, collateral management, fraud detection and claims management in insurance, and reconciliation systems in the securities market.”

Contradicting its previous statement, the report also highlighted the risks associated with private cryptocurrencies, suggesting a complete ban on the ecosystem. While suggesting a ban, the report proposed that the Indian government keeps an open mind on having an official digital currency. Given the ongoing evolution of crypto’s underlying technology, the press release read,

“The Group (IMC) has proposed that the Government may establish a Standing Committee to revisit the issues addressed in the Report as and when required.”

In a bid to stay transparent, the Ministry of Finance has publicly shared a copy of IMC’s report and the draft bill on the website of the Department of Economic Affairs.