The fate of bitcoin and other virtual currencies may hang in the balance for some more time as the government appointed panel is unlikely to formulate regulations around it.
But in what may be come as a relief to bitcoin-watchers, a government official privy to the development told Moneycontrol that bitcoin and other virtual currencies are unlikely to be declared illegal in India.
The panel is still to decide which body will have regulatory oversight over cryptocurrencies.
"Discussions till now suggest that bitcoin will most likely fall under the ambit of the RBI [Reserve Bank of India]. But some are of the opinion that bitcoin is a security rather than a currency and should be regulated by Sebi [Securities and Exchanges Board of India]," the source said.