Even as the existing ban on cryptocurrencies is likely to prevail in India, the government is considering launching crypto tokens for financial transactions in the country. The government has set up a committee that is working on a set of regulations and a roadmap for allowing cryptocurrencies in future. Once the committee finishes drafting the regulations and legally vetting it, the draft will be presented before the Parliament.
Crypto token is a representation of money, unlike cryptocurrency which is treated as an equivalent of money. Crypto tokens are based on blockchain application and it can’t be used in place of fiat money.
Under the chairmanship of the Department of Economic Affairs (DEA), the committee set up by the Finance Ministry is studying the possibility of using various crypto assets including cryptocurrency. DEA secretary, Subhash Chandra Garg who is heading the committee said that the committee is studying the possibility of using cryptocurrencies or the distributed ledger technology for financial transactions. The committee is also mulling upon what kind of regulations are needed for that.
However, Garg categorically denied permitting the usage of cryptocurrency in any manner including in payment systems. Earlier in April, the Reserve Bank of India (RBI) had directed all the banks to stop dealing with businesses and individuals dealing in virtual currencies from July 5. As mentioned in the DNA news report, crypto tokens if at all introduced, will be a kind of digital token for currency and not a substitute for fiat currency.
Experts are of the opinion that the Indian government is unlikely to change its stance on cryptocurrency in the near future. However, it may allow crypto tokens to test waters. The committee is considering the consequences and prospects of allowing cryptocurrency. Crypto tokens don’t impact the country’s monetary policy, as it operates in a closed system. Cryptocurrency, on the other hand, interferes with the country’s money supply situation.