An inter-ministerial committee has recommended banning cryptocurrencies in the country and imposing penalties for activities connected with them, the government said on Monday.
As virtual currencies and its underlying technology are still evolving, the group has proposed the establishment of a standing committee to revisit the issues addressed in its when required, according to a statement.
The government had constituted the inter-ministerial committee on November 2, 2017 under the chairmanship of Secretary at the Ministry of Electronics and Information Technology (MeiTY), Chairman of the Securities and Exchange Board of India (SEBI) and Deputy Governor of the Reserve Bank of India (RBI) as members.
They were asked to study the issues related to virtual currencies and propose specific action to be taken in this matter.
The group's report along with the Banning of Cryptocurrency and Regulation of Official Digital Currency Bill 2019 have been submitted to the government. They will now be examined in consultation with all concerned departments and regulatory authorities before the government takes a final decision.
In the report, the group has highlighted positive aspects of distributed ledger technology (DLT) and suggested various applications, especially in financial services, for use of DLT in India.
The DLT-based systems can be used by banks and other financial firms for processes such as loan-issuance tracking, collateral management, fraud detection, claims management in insurance and reconciliation systems in the securities market.
"As for private cryptocurrencies, given the risks associated with them and volatility in their prices, the group has recommended banning of the cryptocurrencies in India and imposing fines and penalties for carrying on of any activities connected with cryptocurrencies in India," said the report adding the group has also proposed that the government keeps an open mind on official digital currency.
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