Considering Virtual Currencies in India
On April 12, 2017 Ministry of Finance had issued a written press release stating that an Inter- Disciplinary Committee has been formed which is to be chaired by Special Secretary (Economic Affairs) with an objective to examine the existing framework with regard to Virtual Currencies. The Committee has been asked to submit it’s report within three months in July.
Recently Bitcoin has been in news for a while due to high criticism from Senior MP’s of the National Ruling Party. Bitcoin was termed as pyaramid-ponzi scheme by a BJP MP Kirit Somaiya in a parliament session
This statement had caused a wide spread fear among the Bitcoin community in India. Various online petitions by bitcoin entities, traders and Bitcoin enthusiasts have been circulating through social media channels demanding to make bitcoin legal in India.
Until now, Bitcoin is neither declared legal nor illegal. But a few warnings have been issued by RBI, the apex bank of India cautioning it’s users. The RBI issued in a statement that “It has not given any license / authorization to any entity / company to operate schemes or to deal with Bitcoin or any virtual currency. As such, any user, holder, investor, trader, etc. dealing with Virtual Currencies will be doing so at their own risk”.
RBI has also mentioned in the press release that “The creation, trading or usage of VCs including Bitcoins, as a medium of payment is not authorized by any central bank or monetary authority. No regulatory approval, registration or authorization have been obtained by the entities concerned for carrying on such activities.”
Also, Minister of State for Finance, Arjun Ram Meghwal commented that ”The use of virtual currencies like Bitcoins is not authorised by the RBI and could result in a breach of anti-money laundering provisions”
Recenty a major Bitcoin controversy was reported. It is being said this is the first Major Bitcoin controversy in India.(click here to read the full article)
To avoid any further confusions, the committee has been formed to study Bitcoin and it’s operation, it’s affect on present financial and monetary policies. As per the press release about the formulation of committee, it has been formulated with following objectives.
- take stock of the present status of Virtual Currencies both in India and globally
- examine the existing global regulatory and legal structures governing Virtual Currencies
- suggest measures for dealing with such Virtual Currencies including issues relating to consumer protection, money laundering ,
- examine any other matter related to Virtual Currencies which may be relevant.
Various representatives from Department of Economic Affairs, Department of Financial Services, Department of Revenue (CBDT), Ministry of Home Affairs, Ministry of Electronics and Information Technology , Reserve Bank of India ,NITI Aayog and State Bank of India will be members of the committee. (Click here to read the official press release)
Earlier this month, an official verdict was suppose to come on 21 April 2017 about the legality of Bitcoins and Virtual Currencies in India. (Click here to read that article)
When it comes to legality of Bitcoins globally, initially US,China, Russia ,Japan had banned the usage of Bitcoins. But now, most of the countries across the globe has approved Bitcoin as a legal tender.
On April 1,2017 Japan declared Bitcoin as a legal tender (read full article). Russia, where using Bitcoin could lead you into jail had announce to make Bitcoin legal by 2018. (click here to read the article)
US,UK and most of the Europe is now using bitcoins as frequently and regularly as Fiat Currencies.
By studying this trend, it is observed that most of the countries which had declared Bitcoin as a legal tender were against it initially. But later some time these countries understood the advantages and benefits of Bitcoins and Virtual Currencies.Criticism was common everywhere but eventually Bitcoins and virtual currencies were approved.
Only time will tell, what is the fate of Bitcoin and Virtual cryptocurrencies in India.