Panel to suggest norms for Bitcoins, virtual currencies

To examine the existing framework for virtual currencies, the department of economic affairs in the Ministry of Finance has constituted an inter- disciplinary committee chaired by Special Secretary (Economic Affairs) with representatives from the departments of revenue and financial services and the ministries of home Affairs as well as electronics and Information Technology.

• The committee will also include experts from the RBI, the central government’s think tank NITI Aayog and the country’s largest bank, State Bank of India.

Key facts:

• The committee recommends measures to close the regulatory gaps to keep a check on virtual currencies, including Bitcoins.
• The panel has been asked to submit its report within three months and its terms of reference require it to take stock of the present status of Virtual Currencies both in India and the world over, examine the existing regulatory and legal structures governing them and suggest measures for dealing with such currencies.
• The committee will necessarily examine how to cope with money laundering opportunities as well as consumer protection concerns that could arise from the use of virtual currencies.

Background:

The circulation of Virtual Currencies which are also known as Digital/Crypto Currencies has been a cause of concern. This has been expressed in various fora from time to time. The Reserve Bank of India (RBI) had also cautioned users, holders and traders of virtual currencies (VCs), including Bitcoins, about the potential financial, operational, legal, customer protection and security related risks that they are exposing themselves to.