A month old appointed panel by the government has recommended to ban all the cryptocurrencies and make a new law to regulate the space.
All virtual currencies should be treated as illegal and a new law within RBI’s guideline should be brought in, said a source aware of the development to CNBC.
Subhash Chandra Garg-led panel has submitted its report to Finance Minister Arun Jaitley.
The govt should also take action against any entity dealing with it, it added. The govt had appointed a panel to drafts the norms for virtual currencies in November.
Arun Jaitley during this year budget speech in February had said that it does not consider cryptocurrencies as legal tender and will take measures to eliminate the use of such currencies in financing illegitimate activities.
In April, the RBI through its circular titled ‘Prohibition on Dealing in Virtual Currencies’, asked banks, e-wallets, and payment gateway providers to withdraw support for cryptocurrency exchanges and other businesses dealing with VCs in India. Firms dealing with cryptocurrency filed petitions against the ban.
However, in July, the Supreme Court too declined a stay order on it.
The announcement created panic in the Indian trading market. It also led to falling down in prices of Bitcoin, Ethereum, and Litecoin.
Again in October the govt at a meeting financial stability and development council had deliberated on the issues and challenges of cryptocurrency and to ban the use of it in the country.
This led to a number of exchanges such as Unicoin, Wazirx, and Koinex to shift to crypto to crypto and peer to peer trade just to be in the market. One of the largest cryptocurrency exchanges in India, Zebpay also announced the closing of its operation.
Several crypto experts express concern over complete clampdown.
Naval Ravikant, an influential investor and important voice in cryptocurrency industry, warned that if extreme views are taken then it could lead to more brain drain, which according to him is not good for the country.