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India is actively planning to outlaw payments with cryptocurrencies, but would regulate trading in them as an asset, Indian Economic Affairs secretary S.C. Garg, told CNBC TV18.
“The government will take steps to make it illegal as a payment system”, he said and added that the authorities will also introduce regulations for the cryptocurrency exchanges and the trading of ‘crypto-assets’.
The news comes after months of speculation on whether the Indian government will outright outlaw trading in cryptocurrencies or will only regulate it. Earlier this month the Finance Minister Arun Jaitley told the parliament that the government will be enforcing a zero-tolerance policy on the use of cryptocurrencies for transactions of illegal nature. “The Government does not consider cryptocurrencies legal tender or coin and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system”, Jaitley said. His statement was misinterpreted and sparked turmoil in India, leading to a drop in the price of Bitcoin to around $4000 on some Indian cryptocurrency exchanges, before recovering.
Garg told the media that the government has set up a panel to prepare a report on cryptocurrencies, due by the end of the fiscal year. “We hope now within this financial year the committee will finalize its recommendations … certainly, there will be a regulator,” Garg, who is heading the panel, said.
Zebpay, one of India’s leading cryptocurrency exchanges and money transferring services, published a blog post welcoming the latest developments.