NEW DELHI: AN inter-ministerial panel has recommended that all privately circulated cryptocurrencies be banned. It has also suggested heavy fines as well as jail terms up to 10 years for those dealing in unauthorised digital currencies.
“The committee notes with concern the mushrooming of cryptocurrencies almost invariably issued abroad and numerous people in India investing in these cryptocurrencies,” it said in a report submitted along with a draft bill to regulate them.
The draft will be examined by the ministries and regulators concerned before a final set of recommendations will be placed before the Union Cabinet.
The report suggests that the Department of Economic Affairs could set up a group along with RBI representatives and officials from other departments to look into an “appropriate model of digital currency in India”.
According to the panel, headed by finance secretary S C Garg, an ‘official’ digital currency could be launched by the RBI.
It suggests the government use distributed-ledger technology for loan-issuance tracking, collateral management, fraud detection and claims management in insurance, among others.
Cryptrocurrency players are worried. “What will happen to those who hold these currencies?” asked Ashish Singhal, founder and CEO, CoinSwitch. He explained that DLT / blockchain tokens have many uses, other than for cryptocurrency. “If two users use such tokens to transact, will it be called a cryptocurrency?” he asked.
EY India’s Prashant Garg, however, sees the move as positive. “Digital twin currency backed by government regulated and stable fiat money would promote large adoption and facilitate trusted digital money exchange.”
■ Private cryptocurrencies carry huge risks due to their volatile prices
■ These are unregulated and hence, consumers have nobody to turn to in case they are short-changed
■ An ‘official’ currency could address these issues to a large extent
2,116 crypto-currencies are in circulation, having a market cap of $119.46 billion, says the report