It is now official that there will be a ban on cryptocurrency in India. The Inter-Ministerial Committee led by Subhash Chandra Garg, secretary, Department of Economic Affairs (DEA) has submitted its report proposes a complete ban on cryptocurrency in India since it has some serious concerns with it.
The Inter-Ministerial Committee(IMC) was created by the Ministry of Electronics and Information Technology, the Securities and Exchange Board of India, and the Reserve Bank of India.
The report says, “mushrooming of cryptocurrencies almost invariably issued abroad and numerous people in India investing in these.” IMC believes that the private cryptocurrencies are not benefited to the country, but a cryptocurrency created by Reserve Bank of India will prove to be a boon to the country.
According to the report, ”
Therefore, the committee is of the clear view that the private cryptocurrencies should not be allowed. These cryptocurrencies cannot serve the purpose of currency. The private cryptocurrencies are inconsistent with the essential functions of money/currency; hence, private cryptocurrencies cannot replace fiat currencies.
The committee recommends that all private cryptocurrencies, except any cryptocurrency issued by the state, be banned in India. The committee endorses the stand taken by the RBI to eliminate the interface of institutions regulated by the RBI from cryptocurrencies.” However, the members have suggested using distributed-ledger technology in financial services.
The report further said, “Banks and other financial firms can use the DLT-based systems for processes such as loan-issuance tracking, collateral management, fraud detection, and claims management in insurance and reconciliation systems in the securities market,”
The committee is aware and recognizes the potential of the blockchain technology in payments systems, including cross-border and small value payments, data identity management or know-your-customer requirements by various financial entities, insurance, etc.
“The advantages of using DLT are mainly seen in terms of reducing administration and transaction costs, obviating duplication and improving the accuracy of data, improving the speed and efficiency of transactions and detecting fraud,” the committee said.