The Reserve Bank of India is reportedly in the process of preparing a policy on the use of cryptocurrency in the country. This comes at a time when the price of Bitcoin, one of the most popular cryptocurrencies around, has surged to $5,800, despite being banned in China and potentially even Russia.
When asked whether the government is considering legalising cryptocurrencies in India, the RBI Deputy Governor NS Vishwanathan said at a recent event in Kolkata, “I can’t comment on a policy which is still in the making.”
Last month, it was reported that the Indian government was considering a proposal to introduce its cryptocurrency similar to Bitcoins. As per undisclosed sources, the proposal was discussed by a committee of government officials, and the panel found the idea of setting up and running blockchain for financial services useful. They also added that the government might be naming its cryptocurrency ‘Lakshmi’.
A week prior to that, RBI Executive Director Sudarshan Sen had talked about the central bank’s discomfort with Bitcoin, stating, “Right now, we have a group of people who are looking at fiat cryptocurrencies. As regards to non-fiat cryptocurrencies like Bitcoins, I think we are not comfortable with them.” The remarks came in the light of intense global regulatory scrutiny over Bitcoins given the recent upheaval in them.
At the time, it was reported that the RBI was working with a group of experts to look into fiat cryptocurrency, which is basically a digital currency that could serve as an alternative to the Indian rupee.
At present, the Reserve Bank of India regards cryptocurrencies as a violation of the country’s existing foreign exchange norms. This is because the conversion of Bitcoins into foreign exchange does not currently fall under the purview of the central banking institution, making such transactions highly unsafe and vulnerable to cyber attacks.