Cryptocurrency is a ponzi scheme and should be banned: Government official

In order to protect investor interests, the head of Investor Education and Protection Fund Authority (IEPFA) has said that government should ban cryptocurrency trading.

"Cryptocurrency is a ponzi scheme and the IEPFA is of the view that it should be banned. The government must take a stand on it and by not taking a decision we are harming the investors," Anurag Agarwal, Joint Secretary, Ministry of Corporate Affairs and CEO, IEPFA, said at an event in New Delhi.

All government agencies are of the opinion that trading in cryptocurrencies should be banned, Agarwal said.

The government has reportedly begun inter-ministerial consultations on a draft bill to ban cryptocurrencies and regulate official digital currencies. A number of government departments, including the Department of Economic Affairs, Central Board of Direct Taxes, Central Board of Indirect Taxes and Customs and the IEPFA have endorsed the idea of a complete ban on the sale, purchase and issuance of all types of cryptocurrency.

The government had formed a panel under Finance Secretary Subhash Chandra Garg to draft regulations for cryptocurrencies last year.

The government is also coming up with a mobile app to safeguard the interests of small investors who might end up losing money by investing in chit funds.

"It is very simple. You can take a picture of the receipt from your mobile. With all the basic information about your investment, you can upload and we will receive the document. So say if we receive 50 complaints against one particular entity, then we can trigger action against that entity," Agarwal said.

The government is planning to come out with the investor information app in the next ten days. The app can be used to take action against not only companies, but also against proprietors and  legal entities.