The Department of Economic Affairs, under the Finance Ministry, is holding a public consultation on regulating virtual currencies, such as Bitcoin, Litecoin, and Zcash. The consultation is being held by a committee set up by the DEA this April, headed by Dinesh Sharma, an IAS bureaucrat serving as a special secretary to the department. The consultation will look into whether virtual currencies need to be banned, regulated, or left to self-regulate. Such financial regulation consultations usually involve only industry associations and financial conglomerates — or in this case, Bitcoin exchange companies; indeed, we also predicted last month that this process would not be open to the public. The consultation is being held on MyGov.
The committee is set to submit its recommendations to the government in two months. There’s also a Parliamentary Standing Committee that is yet to deliver its report on cryptocurrencies.
Questions for consultation
The MyGov consultation asks:
a) Whether Virtual Currencies (VCs) should be banned, regulated or observed.
b) In case VCs are suggested to be regulated:
i) What measures should be taken to ensure consumer protection?
ii) What measures should be taken to promote orderly development of VCs.
iii) Which appropriate institution(s) should monitor/ regulate the VCs?
c) In case VCs are not suggested to be regulated:
i) What should be the effective self-regulatory mechanism?
ii) What measures should be adopted to ensure consumer protection in this scenario?
The Reserve Bank of India said in 2013 (and reiterated earlier this year) that since virtual currencies are unregulated, Indians would be investing in them at their own risk. “The Reserve Bank of India advises that it has not given any licence/authorisation to any entity/company to operate such schemes or deal with Bitcoin or any virtual currency,” it said this year.