Seeing the growing interest of Indians in virtual currencies like Bitcoin, the Indian government seems to have finally given in on the high demand and is closer than ever to developing regulations around cryptocurrencies.

According to a recent report in MoneyControl, a committee comprising of officials from India's Central Bank RBI, finance ministry, NITI Aayog, ministry of information technology and the State Bank of India are currently in the midst of finalising a report that would decide the future of cryptocurrencies in the Indian subcontinent and whether there's a need to regulate or legalise them.

India is considered as an important country for Bitcoin's growth and future. The demonetisation drive sprung upon the nation late last year helped boost bitcoin usage like never before. With ATMs and banks running dry, people of the second largest population on the planet turned to digital currencies and mobile wallets to quench their cash thirst.

Service oriented Zebpay saw a massive upsurge in interest and within just 18 days into demonetisation, the price of one bitcoin on Zebpay increased from Rs 51,600 to Rs 69,500. Not only Zebpay, even Indian bitcoin startup Unocoin witnessed a price hike of about 20% while BTCXIndia saw an price increase of as much as 40%. Furthermore, bitcoin price in the country was quoted at nearly 25-28% premium, as compared to global standards.

The committee has also been given the work of examining the existing international framework on cryptocurrencies and will suggest measures on consumer protection and combat money laundering.

The government has time and again warned the consumers about being cautious when dealing with virtual currencies. In February this year, RBI issued its latest notice against cryptocurrencies that read, “The Reserve Bank of India advises that it has not given any licence / authorisation to any entity / 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."

A senior government official involved in the committee has told MoneyControl that the panel have had five meetings till now and have also consulted all ministries, public, stakeholders (exchanges such as Zebpay and Unocoin). The committee is most likely to submit their report by next month-end.

One of the most important tasks that the committee has on its hands is to find a solution to the accountability problem with cryptocurrencies and create a body that can regulate the transactions being carried out through them.

As of today, despite registering huge demand, India does not have any monitoring mechanism for virtual currencies in place. While countries like the US, European Union, Australia have indirectly given a stamp of approval to the legal usage of bitcoins--the most commonly used virtual currency-- by introducing regulatory mechanism, there are others like Russia and Iceland who have banned them completely.
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