According to reports, Indian regulators will take action to end the use of cryptocurrencies as part of the country’s financial system. However, the existence of the digital assets issued by the state is not in jeopardy.
Cryptocurrencies Aid Illegal Activities
According to a recent report by the Economic Times, the Indian government plans to take action against the use of digital currencies as many criminals use them to fund illegal activities. The authorities believe that virtual assets should not participate in the nation’s economic network. Finance Minister Pankaj Chaudhary commented:
“The government does not consider cryptocurrencies legal tender or coin and will take all measures to eliminate the use of these crypto-assets in financing illegitimate activities or as part of the payment system.”
However, the Interministerial Committee (IMC), chaired by the Secretary, recommended that the government only ban private cryptocurrencies. At the same time, India shouldn’t ban state-issued virtual assets.
Chaudhary said that the highest authorities in Asian countries will examine the IMC’s proposal and will announce their decision in parliament.
India’s Controversial Stand on Cryptocurrencies
The second most populous country in the world has been hesitant about cryptocurrency for many years. In March 2021, the Indian authorities considered criminalizing the holding, mining, and trading of digital assets. They hinted that entering the crypto market could even result in jail time.
However, two months later, the government rethought its strategy and began to consider introducing cryptocurrency restrictions instead of a full ban. Officials said they would use blockchain for “tech improvements” and suggested new ways to regulate cryptocurrencies as digital assets rather than currencies.
It is worth noting that while the authorities do not have a clear position on digital assets, a large number of people in India are interested in them. Interestingly, Indians known as gold enthusiasts started investing in bitcoin and altcoins, leaving precious metals behind.