The Indian government is considering regulations to allow crypto tokens for financial transactions, although the current ban on cryptocurrencies is “likely to continue”, local news outlet DNA India reported on Friday.
The finance ministry of India has set up a committee which is run by the secretary of the Department of Economic Affairs (DEA). The newly-created organization is reportedly working on a set of regulations and roadmap to allow certain crypto assets to be used in India. After being formulated, the draft will be sent to parliament for further approval.
"The committee is studying the possibility of using cryptocurrencies or crypto technology (distributed ledger technology) for financial transactions and also what kind of regulations are needed for that…[while] the currency is totally banned, the committee is discussing its other usage and how it can be mainstreamed in India,” DEA secretary Subhash Chandra Garg, who is heading the committee, said as quoted by DNA.
The committee is planning to evaluate the crypto tokens in place of smart cards as in metro cards for the public sector. Unlike cryptocurrencies, crypto tokens do not impact the country's monetary policy as one will have to pay physical money to buy a token. The token could be stored as a code in any basic mobile feature phone and can be used for remittances, Garg explained.
The secretary further emphasized that the government does not consider allowing the use of cryptocurrencies as a payment option or in any other manner. He added that the DEA has released “several advisories” to the general public cautioning against the risks associated with cryptocurrencies, stating that they are not “currencies at all” but are similar to “a Ponzi kind of scheme.”
In April, the Reserve Bank of India (RBI) issued a circular which stated that all banks, financial institutions and other entities which come under the RBI’s regulation would not be allowed to “deal with or provide services to any individual or business entities dealing with or settling [cryptocurrencies].”
The restrictions, which took effect on July 5, have triggered a series of petitions filed by crypto exchanges and businesses in the country. Recently, the Supreme Court deferred the final hearing on the ban, originally scheduled for July 20, until September 2018.