Finance Ministry forms new panel on Bitcoin, after previous panel red flagged the cryptocurrency

By: | Updated: December 15, 2017 2:25 PM

Finance Ministry on Friday formed a new panel to frame response with respect to the status of Bitcoin in India. RBI Kanungo, Sebi chief, and IT secretary are the members of the newly formed panel.

RBI Deputy Governor SP Kanungo, Sebi Chairman Ajay Tyagi, and IT Secretary are the other members of the newly formed panel. (Image: Reuters)

Finance Ministry on Friday formed a new panel to frame response with respect to the Bitcoin issue. The new panel will be headed by DEA Secretary Subhash Chandra Garg, CNBC TV 18 reported. RBI Deputy Governor SP Kanungo, Sebi Chairman Ajay Tyagi, and IT Secretary are the other members of the newly formed panel, the report said. The government in April this year had constituted a committee comprising nine members including representatives of RBI, SBI, NITI Aayog and Department of Financial Services to examine the existing framework on digital or cryptocurrencies both in India and globally and recommend measures for dealing with threats arising out of such virtual currencies such as money laundering  and others. The Centre had allotted a three-month time period to the panel for submitting this report. The panel had then said that Bitcoin (most popular cryptocurrency) is neither a currency nor a coin. It had further said that those dealing with cryptocurrencies in India should shut shop. The panel had suggested a law to declare Bitcoin illegal if the measures to curb it appeared ineffective.

I-T surveys

The Income Tax department on Wednesday conducted survey operations at the nine major Bitcoin exchanges of India. Bitcoin is not regulated in the country and its circulation has been a cause of concern among central bankers the world over for quite a while now. The various teams of the sleuths of the department, under the command of the Bengaluru investigation wing, visited the premises of nine such exchanges in the country including in Delhi, Bengaluru, Hyderabad, Kochi, and Gurugram. The survey, under section 133A of the Income Tax Act, was conducted for gathering evidence for establishing the identity of investors and traders, transaction undertaken by them, identity of counterparties, related bank accounts used, among others.

RBI’s stance

The Reserve Bank of India is not much enthused by the idea of the virtual currencies. Cautioning users, holders and traders of VCs on Tuesday last week, the third time since February 2013, India’s central banking institution came out with another warning letter making them aware about the potential economic, financial, operational, legal, customer protection and security related risks associated in dealing with such VCs. “In the wake of a significant spurt in the valuation of many VCs and rapid growth in Initial Coin Offerings (ICOs), RBI reiterated the concerns conveyed in the earlier releases,” said the central bank. RBI clarified that it has not given any licence or authorisation to any entity or company to operate such schemes or deal with Bitcoin or any VC. The Reserve Bank of India first cautioned the investors about the risks associated with trading in VCs way back on 24 December, 2013. Thereafter, it was on 1 February, 2017 another press release was issued by the central bank in this regard.

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