Inter-ministerial group recommends ban on Bitcoin, private cryptocurrency in India: FM

In a major setback for cryptocurrency investors, a high-level committee suggested prohibiting private cryptocurrencies, like Bitcoin, in India. The committee, however, pitched for introduction of an official digital currency with a status of a legal tender and appropriately regulated by the Reserve Bank of India.  

Finance Minister Nirmala Sitharaman on Tuesday said that an inter-ministerial committee has suggested ban on private cryptocurrencies in India, except any virtual currencies issued by state.

"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," says Sitharaman in Rajya Sabha. Her statement came in response to a question whether central government is planning to issue strict guidelines on cryptocurrency trading.

Also read: Cryptocurrencies are neither currency nor commodity; will bring bill soon: Anurag Thakur

The FM further stated that the government will consider the recommendation of IMC and legislative proposal, if any, would be introduced in the Parliament following the due process.

The Reserve Bank of India had prohibited banks from processing transactions relating to cryptocurrency in 2018, which was overturned by the Supreme Court in March 2020.  

Several reports suggest that the Centre is planning to introduce an official digital currency of its own under the Reserve Bank of India.    

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Clearing govt's stance on Bitcoin, the FM said, "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."  

Earlier today, Minister of State for Finance Anurag Thakur had also said that Centre will soon bring bill for the creation of government's own digital currency to promote the underlying technology of cryptocurrency and its uses. He said that regulatory bodies like Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI) don't have a legal framework to directly regulate cryptocurrencies as they are neither currencies nor securities or commodities issued by an identifiable user.

Earlier, the RBI had set up a committee to explore feasibility of launching an official digital currency amid central banks around the world exploring the option of introducing fiat digital currencies.

By Chitranjan Kumar