Centre plans to bring in law to regulate cryptocurrency trade

NEWDELHI: Thegovernmentwants a law to regulate trade of cryptocurrencies such as Bitcoin in India and has formed a committee to fast track the process, two government officials close to the development said.

Cryptocurrencies are virtual currencies (VC) that are created and held electronically. The transactions of virtual currencies are based on Blockchain technology and the value of any cryptocurrencyisdeterminedby demand and supply.

InadditiontoBitcoin,thereare more than 1,300 such decentralised currencies such as Ripple, Litecoin etc.

“Therearetwomainconcerns that the law on cryptocurrency willaddress:thesourceofmoney being used to trade in them; and regulation of exchanges of VC to protectthecommonman,”saida government official in the know of the matter. “We understand the interest in Bitcoin, its value went up from a few hundred dollarssomeyearsbacktoabout₹10 lakh now. But we need to ensure cleanmoneyisbeing usedtobuy VC,” the source added.

The concern stems from Indianauthorities’apprehension thatblackmoneyisbeingusedto trade in cryptocurrencies.

“The government is examiningtheuseofblackmoneytobuy VC. Post-demonetisation, black moneywaschannelledintobuyingVC,soweneedtohaverulesto identifythesourceofmoneythat is being used to buy VC,” said another government official.

Theofficials are notallowed to disclose their names because theyarenotspokespersonsofthe committee that is working on cryptocurrency.

The committee has representation from the departments of economic affairs, tax and from the RBI and the ED.

CRYPTOCURRENCIES ARE VIRTUAL CURRENCIES (VC) THAT ARE CREATED AND HELD ELECTRONICALLY