Centre plans to bring in law to regulate cryptocurrency trade

NEWDELHI: The government wants 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 cryptocurrency is determined by demand and supply.

In addition to Bitcoin, there are more than 1,300 such decentralised currencies such as Ripple, Litecoin etc.

“There are two main concerns that the law on cryptocurrency will address: the source of money being used to trade in them; and regulation of exchanges of VC to protect the common man,” said a government official in the know of the matter. “We understand the interest in Bitcoin, its value went up from a few hundred dollars some years back to about ₹10 lakh now. But we need to ensure clean money is being used to buy VC,” the source added.

The concern stems from Indian authorities’ apprehension that black money is being used to trade in cryptocurrencies.

“The government is examining the use of black money to buy VC. Post-demonetisation, black money was channelled into buying VC, so we need to have rules to identify the source of money that is being used to buy VC,” said another government official.

The officials are not allowed to disclose their names because they are not spokespersons of the 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