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Last Updated : Jul 22, 2019 06:59 PM IST | Source: Moneycontrol.com

Inter-ministerial committee on virtual currencies suggests banning of cryptocurrencies

The report also suggests punishment for holding and trading in crypotocurrencies.

Kamalika Ghosh @GhoshKamalika
Representative image
Representative image

The inter-ministerial committee set up by the government on virtual currencies has suggested banning of  cryptocurrencies in India.

"As for private cryptocurrencies, given the risks associated with them and volatility in their prices, the group has recommended banning of the cryptocurrencies in India and imposing fines and penalties for carrying on of any activities connected with cryptocurrencies in India," the Finance Ministry said in a press release on July 22.

The report also suggests punishment for holding and trading in crypotocurrencies. "Whoever directly or indirectly mines, generates, holds, sells, deals in, transfers, disposes of or issues cryptocurrency... shall be punishable with fine or with imprisonment which shall not be less than one year but which may extend up to ten years, or both," the report said.

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The group has also proposed that the government should have an open mind on having an official digital currency.

The group has proposed that the government might consider setting up of a standing committee to revisit the issues addressed in the report, as virtual currencies and its technology are still evolving.

The report also said that the government in consultation with the RBI, may approve digital rupee to be legal tender to come into effect as and when notified and to an extent as may be specified.

"The digital rupee shall be governed by such regulations as may be notified by the Reserve Bank under the relevant provisions of the Reserve Bank of India Act, 1934 (Act No. 2 of 1934)," the report submitted to the government said.

The government had constituted an inter-ministerial committee in 2017 under the chairmanship of secretary, economic affairs, with Secy (MeiTY), Chairman (SEBI) and deputy governor, RBI as members, to study the issues related to virtual currencies and propose specific action to be taken in this matter.

"This report and draft bill will now be examined in consultation with all the concerned departments and regulatory authorities, before the government takes a final decision," the release said.

The report also highlights the positive aspect of distributed-ledger technology (DLT) and suggests various applications, especially in financial services, for use of DLT in India.

"The DLT-based systems can be used by banks and other financial firms for processes such as loan-issuance tracking, collateral management, fraud detection and claims management in insurance, and reconciliation systems in the securities market," the release said.

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First Published on Jul 22, 2019 06:46 pm
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