There is every type of report suggesting that the Indian government is exploring the possibility of reviewing its stance on digital currencies. This included the possible launch of its own crypto tokens as an alternative to smart travel cards. The government seems to be waiting for the virtual assets market to settle down and also look at other countries as to how they are trying to regulate it. This will enable India to take a clear stance on the emerging sector.
Researching Use of Crypto Token
The government has already established a committee on the cryptocurrency market though it slapped a blanket ban in April. Now a member of the committee and finance ministry’s senior official indicated that the committee is exploring the use of a custom-based digital coin with blockchain as a platform. Its aim is that it could be an alternative or replacement to smart cards in the public sector, bitcoinnews.com reported. This included the metro card. This is unlikely to affect its fiat currency.
The committee is also exploring the possibility of including digital tokens in the private sector. The area of focus included air mile loyalty programs since they could not be converted back into fiat money. The Finance Ministry constituted the Inter-Ministerial Committee (IMC) early last year with members from several government departments, taxation authority, Department of Economic Affairs and representatives from Reserve Bank of India and the State Bank of India.
The government has entrusted the responsibility of producing regulatory roadmap in respect of the digital coin with the IMC. Therefore, the committee is accountable for deciding the usability of virtual assets in the public sector. They would take into consideration the global and governmental policies apart from the legal structure in respect of cryptocurrencies. The most significant issue is that the committee would have to find particular steps aimed at curbing the money laundering activities with the help of digital coins.
Though there is no specific news from the government side, there are enough reports suggesting that the Indian government is keen on executing a digital currency meant for financial transactions. At the same time, an unofficial clarification came in that the planned crypto asset would be different from the one used in other countries. India has already banned bitcoin and other virtual assets in the country in April.
Financial Transactions Alone
Any potential launch of tokens by the Indian government would mean that it will differ from other since it would be used mainly for executing financial transactions and that too in India alone. This is an obvious reference to the money laundering issue, and the restricted usage could curb such activities.
Digital Lenders Association of India president believes that Indians would have to shell out for such digital coins with physical money if at all they are constituted. He also thinks that it could remove any impact on monetary policy that the country would have to adopt. In September, the Supreme Court will hear a case between the RBI and the digital coin exchange on the central bank’s circular stopping all services.