Ending years of wait-and-watch policy, the government is set to take steps soon to regulate the use of virtual currencies (VCs) like Bitcoin in India. A government panel, formed on April 12 to suggest measures to deal with VCs, are veering towards a consensus that “it is not something which needs to be promoted”, said an official aware of the matter.
Before finalising its report, the panel is also likely to seek views from the public as well as from the cryptocurrency start-ups. The panel, however, may not recommend a blanket ban on digital currencies, as it is difficult to implement. Bitcoin essentially operates on a peer-to-peer basis. It is both a digital asset and payment system, the users of which can transact directly among themselves without a banking intermediary.
The Indian government panel has not yet firmed up its mind whether to classify VCs as derivative or commodity and what will be their tax treatment. The objective of regulating VCs is to discourage their use like is the case for gambling, one official said. At present gambling in India is regulated by a Central Act and several state Acts, which specifically prohibits public gambling and running or being in charge of a common gaming house.
Though the volume of Bitscoin transactions is very low in India, the number of users have shot up to 10 lakh from below 1 lakh a year ago. Besides fund transfers from overseas, users can use Bitcoins from buying pizza and movie tickets to shopping on Amazon, Flipkart, Freecharge, Bookmyshow and Makemytrip.