The Indian Government is reconsidering its earlier decision to ban the use of cryptocurrency in the country, by setting up a committee to research on crypto tokens.
DNA India reported that the India government under the ministry of finance has set up a committee which is headed by the secretary of the Department of Economic Affair (DEA).
The objective is to study the possibility of using crypto tokens in place of smart cards. Another possibility is for the tokens to be used in loyalty programmes, with the exclusion of converting it into fiat currency and using it for the purchase of goods and services in the country.
So far, the committee has made progress and drafted a proposal which states how crypto tokens can be used as well as a roadmap. The proposal is being vetted at the moment and will be reviewed by the parliament when it is ready.
The chairman of the committee, Subhash Chandra Garg was quoted by the source,
“The committee is studying the possibility of using cryptocurrencies or the crypto technology (distributed ledger technology) for financial transactions and also what kind of regulations are needed for that.”
He further maintained the government’s position on banning cryptocurrencies in the country was the right call, but that the committee is working out other ways crypto tokens can be used effectively in the country, as well as outlining the opportunities and threat of legalizing cryptocurrencies.
Differentiating Cryptocurrencies and Crypto Tokens
A senior official working with the ministry explained in the report that crypto tokens differ from cryptocurrencies because they are not fiat currencies, and can never be compared to one.
According to him, “One will need to pay physical money to buy a token which could be stored as a code in any basic mobile feature phone. It can even be used for remittances. But in case of cryptocurrency, one needs to allow it as a legal tender first.”
If the government decides to roll out crypto tokens, then it will be a kind of digital token for currency and will not replace fiat.
It was reported earlier in the year that India’s ministry of finance described cryptocurrencies as Ponzi scheme and warned financial institutions to desist from conducting any crypto related transaction with individuals or face the penalty effective from July 5th, 2018.
The ban on cryptocurrencies in India did not go down well with some individuals who claimed the ban is affecting their business and later asked the country’s judiciary to grant them interim relief which was denied. However, the final hearing is now scheduled to hold in September after the court announced an extension.
It has become likely that whatever success crypto tokens achieve in the country will determine whether the ban on cryptocurrencies will be lifted. For the time being, though, “there is no fixed date” on when the committee will release the proposal to the parliament, and we’ll fold our hands and watch.