The government has decided to close the regulatory gaps to keep a check on virtual currencies, including Bitcoins, and has set up an inter-disciplinary committee to recommend an action plan for dealing with such currencies within three months.
“The circulation of Virtual Currencies which are also known as Digital/Crypto Currencies has been a cause of concern. This has been expressed in various fora from time to time,” the finance ministry said in a statement on Wednesday.
The Reserve Bank of India (RBI) had also cautioned users, holders and traders of virtual currencies (VCs), including Bitcoins, about the potential financial, operational, legal, customer protection and security related risks that they are exposing themselves to, the ministry said.
To examine the existing framework for virtual currencies, the department of economic affairs in the Ministry of Finance has constituted an inter- disciplinary committee chaired by Special Secretary (Economic Affairs) with representatives from the departments of revenue and financial services and the ministries of home Affairs as well as electronics and Information Technology.
In its latest advisory issued this February, the Reserve Bank of India had said it has not given any licence or authorisation to any entity or company to operate such schemes or 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,” it had warned.
The committee will also include experts from the RBI, the central government’s think tank NITI Aayog and the country’s largest bank, State Bank of India.
The panel has been asked to submit its report within three months and its terms of reference require it to take stock of the present status of Virtual Currencies both in India and the world over, examine the existing regulatory and legal structures governing them and suggest measures for dealing with such currencies.
The committee, the ministry said, will necessarily examine how to cope with money laundering opportunities as well as consumer protection concerns that could arise from the use of virtual currencies.
