India not ready for cryptocurrency, Centre yet to decide on legislative proposal for virtual currencies

Replying to a question in the Rajya Sabha, the minister said that a high-level inter-ministerial committee (IMC) constituted under the chairmanship of the secretary (Economic Affairs) to study the issues related to virtual currencies (VC) recommended in its report that all private cryptocurrencies are prohibited in the country.

She added that the government would take a decision on the recommendations of the IMC and the legislative proposal, if any, would be introduced in the Parliament following due process.

On 8 February, Tesla, the electric car manufacturer owned by billionaire Elon Musk, announced that the company bought Bitcoins worth $1.5 billion in January 2021 after the company updated its investment policy to invest in digital assets. After that, the price of the digital asset jumped as much as 16 per cent with prices nearing nearly $45,000 for the first time. As of 9 February, 1 Bitcoin is worth Rs. 34,87,186.16.

In view of the risks associated with virtual currencies, including Bitcoins, the Reserve Bank of India, in its circular dated 6 April 2018, had advised all entities regulated by it not to deal in VCs or provide services for facilitating any person or entity in dealing with or settling VCs. However, the Supreme Court in its judgement dated 4 March 2020 had set aside the RBI circular.

Also, it was announced in the Budget speech 2018-19, "The government does not consider crypto-currencies legal tender or coin and will take all measures to eliminate the use of these crypto-assets in financing illegitimate activities or as part of the payment system. The government will explore the use of blockchain technology proactively for ushering in the digital economy."

With blockchain technology ushering in the virtual currency market, Indians are also looking to invest in these currencies.